CAIE A-Level Business 5.5 Budgets Question Bank

CAIE A-Level Business 5.5 Budgets Question Bank
Cambridge International AS & A Level Business 9609 syllabus for exams in 2026, 2027 and 20282026–2028

Practise explaining budget purposes, comparing incremental, flexible and zero-based approaches and calculating variances to monitor performance, allocate resources and control…

Exam points

  • distinguish incremental, flexible and zero-based budgets by how each sets planned figures
  • calculate actual minus budget variances and label each favourable or adverse in context
  • evaluate budgeting through coordination, control, motivation, rigidity and data reliability

Covered syllabus points

5.5.1—Budgets5.5.2—Variances

Question 1

Question 1(b)(i)

(a)

Refer to Table 1.1. Calculate the profit variance for SF in 2024. State whether the variance is favourable or adverse.

[ 3 ]

Question 1(b)(ii)

(b)

Explain one drawback to SF of using budgets.

[ 3 ]

Question 2

[Maximum number: 6]

Law Advice Forum (LAF)

Drake has a law degree and works for a partnership of lawyers during the day. Drake owns a website that gives free legal advice. He works on the website in the evenings and at the weekend.

He started the website as a hobby, but the website has grown to over 20000 users and he now sells advertising on his videos and on the website.

Drake uses outsourcing for some areas of his website. He has recently been sent a report showing variances in the budget from the previous month (see Table 2.1).

Table 2.1 Budget report for Drake's website in the previous month

Table 2.1 Budget report for Drake's website in the previous month

Drake has now left his job and is focusing full time on the website. He rebranded the website as Law Advice Forum (LAF). Drake's business plan for LAF included:
- Operating as a sole trader.
- Continuing to develop and expand the website to provide legal advice and paid legal services.
- Renting an office in city G where all employees would work.
- Hiring five fully qualified lawyers.
- Hiring three administrators.
- Leasing IT equipment.

However, Drake is concerned about the limitations LAF will face as a labour intensive operation.

Question 2(b)(i)

(a)

Refer to Table 2.1. Calculate the profit variance for Drake's website in the previous month. State whether the variance is favourable or adverse.

[ 3 ]

Question 2(b)(ii)

(b)

Explain one way Drake could use the budget data in Table 2.1.

[ 3 ]