Tag: Business Studies

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

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Alex is the owner of a hat shop called Alex’s Hats.

His main objective is to increase sales revenue. 

Which one of the following options is most likely to achieve this objective? 

Select ONE answer:

1. Reduce advertising in the local newspaper
2. Reduce the price of shoes with price inelastic demand
3. Reduce her opening times Monday to Friday
4. Reduce the price of shoes with a price elastic demand

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 – changes in tastes and fashion directly affects the kind of food Not correct – this may result in less awareness of Alex’s Hats, which could reduce the number of hats sold and therefore overall revenue falls.
2. Not correct – this will not increase sales revenue as customers are less sensitive to a price reduction and will only increase the amount they purchase by a small percentage.
3. Not correct – this may result in less sales for Alex as customers have less opportunity to shop.
4. Correct – sales revenue is income earned from selling a product or service.  A small change in price of a price elastic hat will lead to a proportionately greater increase in quantity sold.  The loss of revenue from the reduction in price will be more than made up by the increase in sales of hats, therefore increasing revenue.

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

A global think-tank predicts a world population of over 9 billion people by 2050.

This will require a 70% increase over the current global food production to be able to feed everyone.

Which one of the following options is a direct factor in the supply of food? 

Select ONE answer:

1. Changing tastes and fashions
2. Growth in disposable income
3. Advertising to consumers
4. Levels of technology

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 – changes in tastes and fashion directly affects the kind of food consumed and not the availability.
2. Not correct – growth in disposable incomes affects the consumers’ ability to buy different kinds of food and different amounts.
3. Not correct – advertising to consumers affects their desires for particular types of goods and services leading to changes in demand not supply.
4. Correct – Supply is the amount a producer is willing and able to supply at a given price in a given time period. Technology can be used to increase the quantity or quality of a product supplied.  For example, the increasing use of genetically modified food to increase crop yields is a use of technology in food production.

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Stafford Pants is a company limited by guarantee manufacturing ‘underwear with style’. For every pair of boxer shorts it sells, Stafford Pants pays Alex to plant ten deciduous trees to further beautify Cannock Chase.

The most likely motivation for Stafford Pants for being in business is to…?

Select ONE answer:

1. make a contribution to society
2. pay employees the minimum wage
3. maximise and retain its profits
4. keep costs to a minimum

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 – This is a business that has a clear mission to improve social and/or environmental well- being alongside their profit-making activities.  Stafford Pants pays for planting trees from every pair sold, which improves the local area.  Therefore, it clearly aims to make a difference by ensuring every pair of shorts sold makes a positive contribution to society.
2. Not correct – Stafford Pants have to pay its employees a minimum wage regardless of their motivation because it is the law.
3. Not correct – if it wanted to maximise and retain its profits, Stafford Pants would not pay for planting trees, it would keep all its money in the business.
4. Not correct – planting trees will incur extra costs.

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

In 2000 Ruritania joined the European Union (EU). Many Ruritanian workers then migrated to other European countries to seek work.

The most likely impact of this migration on businesses in Ruritania is?

Select ONE answer:

1. average wage rates are reduced
2. economic growth is sustained
3. more people are willing to work
4. skills gaps cannot be filled

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 – average wage rates are likely to rise when there is a shortage of skilled labour in Ruritania, who will then command a premium price.
2. Not correct – it will be difficult to sustain economic growth when the workforce is reduced, and many Ruritanian business may not be able to maintain current output.
3. Not correct – the Ruritanian population is being reduced which means fewer people are available and willing to work.
4. Correct – migration is the movement of people from one country to another. Skilled Ruritanian workers found employment in other EU countries.  Therefore from 2000 onwards businesses in Ruritania could not find enough skilled workers to fill vacancies.

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