1a
2 marks
Define the term ‘zero budgeting’.
1b
3 marks
Explain one benefit to a business of using budgets.
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Budgets (Cambridge (CIE) A Level Business): Exam Questions
Exam code: 9609
34 mins5 questions
2
4 marks
Read the following extract (Table 1) before answering
Calculate for 2019 the:
variance in total sales revenue per night for NH’s basic hotels.
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3
16 marks
Evaluate the benefits to GR of using budgets.
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4a
3 marks
Case Study
Dayo's Bakery (DB)
Dayo started a bakery business five years ago in country W. She uses batch production to make a range of breads, pastries and cakes, which she sells to local restaurants and retail outlets. DB now employs 18 workers. Skilled bakers are difficult to find in country W, as many have moved to work for larger food manufacturers in the capital city. Dayo uses on-the-job training to develop new employees, but this takes time and has increased costs.
Dayo has set a mission to 'provide high-quality, locally sourced baked goods to the communities of country W'. She plans to open a third bakery location by the end of the year.
DB does not have enough working capital to open the third location without additional finance. Two options are available:
Option A: A bank loan of $80 000 at an annual interest rate of 8%
Option B: A business partner, Kofi, who would invest $80 000 in return for a 30% share of DB's annual profits
Table 1.1 shows DB's budgeted and actual financial data for the six months ended March 2024.
Table 1.1 DB budgeted and actual financial data (six months ended March 2024)
Budget ($) | Actual ($) | Variance ($)
| |
|---|---|---|---|
Revenue | 120 000 | 105 000 | |
Labour costs | 42 000 | 52 000 | |
Raw material costs | 36 000 | 33 000 | |
Fixed overheads | 18 000 | 18 000 | 0 |
Total costs | 96 000 | 103 000 | |
Profit | 24 000 | 2 000 |
Refer to Table 1.1. Calculate the variance in revenue and the variance in labour costs for DB.
4b
3 marks
Explain one benefit to DB of setting a budget.
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5
3 marks
Case Study
Dayo's Bakery (DB)
Dayo started a bakery business five years ago in country W. She uses batch production to make a range of breads, pastries and cakes, which she sells to local restaurants and retail outlets. DB now employs 18 workers. Skilled bakers are difficult to find in country W, as many have moved to work for larger food manufacturers in the capital city. Dayo uses on-the-job training to develop new employees, but this takes time and has increased costs.
Dayo has set a mission to 'provide high-quality, locally sourced baked goods to the communities of country W'. She plans to open a third bakery location by the end of the year.
DB does not have enough working capital to open the third location without additional finance. Two options are available:
Option A: A bank loan of $80 000 at an annual interest rate of 8%
Option B: A business partner, Kofi, who would invest $80 000 in return for a 30% share of DB's annual profits
Table 1.1 shows DB's budgeted and actual financial data for the six months ended March 2024.
Table 1.1 DB budgeted and actual financial data (six months ended March 2024)
Budget ($) | Actual ($) | Variance ($)
| |
|---|---|---|---|
Revenue | 120 000 | 105 000 | |
Labour costs | 42 000 | 52 000 | |
Raw material costs | 36 000 | 33 000 | |
Fixed overheads | 18 000 | 18 000 | 0 |
Total costs | 96 000 | 103 000 | |
Profit | 24 000 | 2 000 |
Explain the term budget.
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