CAIE A-Level Business 5.4 Costs Question Bank

CAIE A-Level Business 5.4 Costs Question Bank
Cambridge International AS & A Level Business 9609 syllabus for exams in 2026, 2027 and 20282026–2028

Practise classifying and calculating costs, comparing full and contribution costing and using break-even or profit information to support pricing, performance and special-order…

Exam points

  • classify fixed, variable, direct and indirect costs before calculating totals or unit figures
  • use contribution or full costing for the stated decision and distinguish contribution from profit
  • calculate and interpret break-even, margin of safety or profit before evaluating limitations

Covered syllabus points

5.4.1—Cost information5.4.2—Costing approaches5.4.3—Cost information uses5.4.4—Break-even analysis

Question 1

[Maximum number: 6]

Town Trucks (TT)

TT is a private limited company in country J. TT has contracts to deliver products to secondary, tertiary and quaternary sector businesses.

QZ is one of the largest manufacturers in country J and plans to outsource its supply chain management. A contract has been agreed between TT and QZ based on the following cost and revenue data (see Table 1.1). TT's Sales Manager has forecast that TT will make 5000 deliveries with the new contract.

Table 1.1 Cost and revenue forecast for the QZ contract

Table 1.1 Cost and revenue forecast for the QZ contract

TT employs 120 drivers. The majority of these drivers are white men aged between 40 and 60 . A national newspaper has recently criticised the truck industry in country J for not having diversity and equality in the workplace.

Klide, the Marketing Manager, has been set an objective to increase TT's revenue. He has decided to target small online retailers. TT will pick up individual products from the small online retailers and deliver them to households. This would require a new fleet of smaller trucks but has the potential to increase TT's revenue. Klide plans to use digital promotion to target these small online retailers.

Question 1(b)(i)

(a)

Refer to Table 1.1 and other information. Calculate TT's forecast total profit from the QZ contract.

[ 3 ]

Question 1(b)(ii)

(b)

Explain one reason why TT needs accurate cost information.

[ 3 ]

Question 2

Question 2(a)

(a)

Define the term full costing.

[ 2 ]

Question 2(b)

(b)

Explain one limitation of contribution costing.

[ 3 ]

Question 3

Question 3(a)

(a)

Define the term break-even analysis.

[ 2 ]

Question 3(b)

(b)

Explain one limitation for a business of break-even analysis.

[ 3 ]

Question 6(a)

[Maximum number: 8]

Analyse two uses of cost information for a business.