Business Studies Multiple Choice Question – 11 October 2021

The home of multiple choice questions for all your KS3, KS4 and KS5 Business Studies, Economics and Accounting requirements.

Photo by Andrea Piacquadio on Pexels.com

Lucy started her own range of hair products called Lucy’s Fine Hair. The Lucy No1 Hair Kit sold out within minutes of its launch in the UK.

This quick selling out of the hair kits was most likely caused by poor?

Select ONE answer:

  1. quality of products
  2. promotion of products
  3. sales forecasting
  4. branding

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 3

  1. Not correct – it is more difficult to coordinate overall strategy as each hotel miNot correct – product quality must have been very good if all the hair kits have been purchased in minutes.
  2. Not correct – customers must have been made aware of the hair kits in order to purchase them which resulted in all of the inventory selling out.
  3. Correct – sales forecasting is an estimate of future sales.  Lucy’s Fine Hair must have underestimated the levels of demand for the No1 Hair Kits.  This resulted in Lucy’s Fine Hair not having enough inventory to meet demand in the UK.
  4. Not correct – Lucy’s Fine Hair must have a strong brand image for the No1 Hair Kits to sell out so quickly.

Creative Commons License
This work is licensed under a Creative Commons Attribution 4.0 International License.

Business Studies Multiple Choice Question – 10 October 2021

The home of multiple choice questions for all your KS3, KS4 and KS5 Business Studies, Economics and Accounting requirements.

Photo by Andrea Piacquadio on Pexels.com

Stafford Hotels owns 10 hotels across the county of Staffordshire.

It uses a decentralised organisational structure to run these hotels. 

What is an advantage of using a decentralised organisational structure?

Select ONE answer:

  1. There is a clear strategic direction
  2. There is a greater consistency in the decisions made
  3. There is an increased ability to achieve economies of scale 
  4. There is an increased motivation amongst staff

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 4

  1. Not correct – it is more difficult to coordinate overall strategy as each hotel might make different decisions and these are not made by the senior management.
  2. Not correct – as more decisions are being made away from the centre of the business by local managers, it is inevitable that some consistency of service will be foregone between the 10 hotels.
  3. Not correct – economies of scale are less easy to achieve as each of the 10 hotel controls what supplies are stocked or sold in their hotels reducing purchasing economies.
  4. Correct – A decentralised organisational structure is where some decisions are made at headquarters and some are taken by local managers.  Each of the hotel managers is empowered to make decisions in each of the 10 hotels, reacting to local market changes.  This may result in staff feeling more valued leading to better customer service in the long term, and thus increased profits.

Creative Commons License
This work is licensed under a Creative Commons Attribution 4.0 International License.

Business Studies Multiple Choice Question – 9 October 2021

The home of multiple choice questions for all your KS3, KS4 and KS5 Business Studies, Economics and Accounting requirements.

Photo by Andrea Piacquadio on Pexels.com

Alex’s Big Bikes is a Stafford motorcycle manufacturer. In 2020, it introduced just in time (JIT) in its factories.

This change is most likely to result in?

Select ONE answer:

  1. a reduction in the level of buffer inventory
  2. an increase in working capital
  3. a reduction in the cost of delivery
  4. an increase in reorder quantities

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 1

  1. Correct – JIT is an inventory system that does away with the need to hold large quantities of components.  This results in Alex’s Big Bikes only holding just enough components for the current production of motorcycles.  The need for buffer stock is reduced because supplies are delivered for specific production runs/delivered as needed.
  2. Not correct – there should be a decrease in working capital as less inventory is held.
  3. Not correct – JIT normally requires smaller delivery quantities, more often and this will cost more.
  4. Not correct – reorder quantities are likely to decrease as fewer motorcycles are produced and delivered at a time. 

Creative Commons License
This work is licensed under a Creative Commons Attribution 4.0 International License.

Business Studies Multiple Choice Question – 8 October 2021

The home of multiple choice questions for all your KS3, KS4 and KS5 Business Studies, Economics and Accounting requirements.

Photo by Andrea Piacquadio on Pexels.com

PricklyPear plans to increase the output of its mobile phones from its existing facilities in Stafford to improve its capacity utilisation.

Which is the best way to improve capacity utilisation at PricklyPear? 

Select ONE answer:

  1. Increase prices of their mobile phones
  2. Reduce spending on advertising
  3. Increase the workforce productivity
  4. Reduce inventory levels

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 3

  1. Not correct – an increase in prices results in less demand from consumers who may also switch to cheaper rivals, both will lead to a fall in production and therefore capacity utilisation.
  2. Not correct – less advertising may lead to a fall in demand for PricklyPear and a fall in production which will cause capacity utilisation to fall even more
  3. Correct – Definition of capacity utilisation e.g. the amount of actual output expressed as a percentage of the maximum possible output.  An increase in productivity will enable PricklyPear’s existing workforce to produce more mobile phones per worker.  The output of the phones is therefore increased from using the same facilities.
  4. Not correct – reducing inventory levels also means that there is more unused space i.e. capacity utilisation decreases

Creative Commons License
This work is licensed under a Creative Commons Attribution 4.0 International License.

Business Studies Multiple Choice Question – 7 October 2021

The home of multiple choice questions for all your KS3, KS4 and KS5 Business Studies, Economics and Accounting requirements.

Photo by Andrea Piacquadio on Pexels.com

John owns a garden landscaping business.

He has been advised by his accountant Bob to set budgets for the business.

John uses variance analysis to monitor these budgets.

The table below shows the budget data from a recent very important gardening contract. 

Budgeted (£)              Actual (£)

Overheads                     300                             300

Labour                           1200                           900

Raw materials                800                            800

What is the variance between Budgeted and Actual data?

Select ONE answer:

  1. £1 700 adverse
  2. £1 700 favourable
  3. £300 adverse
  4. £300 favourable

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 4

  1. Not correct
  2. Not correct
  3. Not correct
  4. Correct – The actual cost: £300 + £900 + £800 = £2 000.  The budgeted cost: £300 + £1 200 + £800 = £2 300.  Formula for cost variance = Actual – Budget

Creative Commons License
This work is licensed under a Creative Commons Attribution 4.0 International License.