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Free response · 1.7 Organization, Roles, and Responsibilities
Exam-style concept-application task: apply the topic to a new business scenario. Suggested time 12–13 minutes.
FRQ 3 — Concept application (3 points)
Luna Bakery is owned by Luna as a sole proprietorship. It has grown to three locations and 28 employees. Luna still does all the hiring, keeps the books herself, and personally guaranteed a $90,000 equipment loan. An investor has offered to buy 40% of the business if it becomes a corporation. Luna wants to keep making the final decisions but is worried about losing her house if the bakery cannot repay the loan.
(A) Identify the type of business organization that would protect Luna's personal assets while allowing her to retain control over decision making. 1 pt
(B) Explain ONE trade-off Luna would face if she accepted the investor's offer and became a corporation. 1 pt
(C) Explain why Luna's bakery, at 28 employees, would benefit from organizing roles into specialized departments, and identify ONE function she could reasonably outsource. 1 pt