Question 5(b)May/June 20269609/1212 marks
Evaluate the importance of using budgets for the success of a large road construction project.
Show mark scheme
Case studies and questions reproduced from the original Cambridge material; mark schemes are cropped from the official mark scheme PDFs. Papers from 2020–2022 were set on the previous syllabus and can touch content that is A Level today — those topics are marked “A Level content” above.
About Budgets
The purposes of budgeting, preparing budgets, variance analysis, and the benefits and limitations of budgets.
20 past paper questions on this topic since 2024, across 6 exam sessions.
How often it comes up
| Year | Paper 1 | Paper 2 | Total | Chart |
|---|---|---|---|---|
| 2026 | 1 | 1 | 2 | |
| 2025 | 4 | 4 | 8 | |
| 2024 | 3 | 7 | 10 |
Every 2025–2026 question on Budgets
The whole topic on one page, with answers and mark schemes. Printing this page prints just this list.
Paper 1 · Short answer and essay (5)
Question 6(b)May/June 20259609/1212 marks
‘The use of budgets is the most effective way to monitor the performance of a hotel.’ Evaluate this view.
Show mark scheme
Question 2(a)May/June 20259609/132 marks
Define the term incremental budgets.
Show mark scheme
Question 2(b)May/June 20259609/133 marks
Explain one advantage to a business of using variance analysis.
Show mark scheme
Question 3(b)February/March 20259609/123 marks
Explain one benefit to a business of using budgets.
Show mark scheme
Paper 2 · Data response (5)
Case study: Drive Wise (DW)
DW operates a franchise as a franchisor. Driving instructors can become a franchisee and
sell driving lessons under the DW brand. DW has grown very quickly, gaining a 25% share
of the market in three years.
Driving instructors must prepare a business plan when applying to become a DW
franchisee. To prepare the business plan, the driving instructor must carry out primary 5
market research to assess potential customer demand for driving lessons in their area.
DW sets budgets each year. The budget for advertising was $25 500 in 2025. However, DW
actually spent $31 800 on advertising in 2025.
The prices for DW driving lessons are set by DW’s finance manager, who uses break‑even
analysis to make pricing decisions. 10
In addition to driving lessons, DW sells a ‘learn to drive’ book which customers can buy
from its website with next day delivery. The book is very popular, and the business uses JIC
(Just in Case) inventory management.
DW’s website generates over $28 000 of revenue each year from sales of the ‘learn to
drive’ book. The website is updated by the website manager and an IT assistant. The 15
website manager designs the website and resolves any technical problems. The IT
assistant helps the manager with simple programming and administrative tasks.
The website manager will retire in two months’ time. A new website manager will need
to be recruited. The human resource manager needs to decide whether the new website
manager should be recruited internally or externally. 20
Question 2(b)(i)May/June 20269609/213 marks
Calculate the budget variance for advertising in 2025. State whether it is favourable or adverse.
Show mark scheme
Case study: 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 20 000 users and he now sells advertising on his videos and on the website. 5 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).
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. 15
- 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. 20
- Leasing IT equipment. However, Drake is concerned about the limitations LAF will face as a labour intensive operation.
Question 2(b)(i)October/November 20259609/223 marks
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.
Refers to: images/cases/w25_22_p3_Table_2_1_Budget_report_for_Drake_s_website_in.png
Show mark scheme
Question 2(b)(ii)October/November 20259609/223 marks
Explain one way Drake could use the budget data in Table 2.1.
Refers to: images/cases/w25_22_p3_Table_2_1_Budget_report_for_Drake_s_website_in.png
Show mark scheme
Case study: Solar Farms (SF)
SF is a private limited company that develops and maintains large-scale solar farms in
country X. SF operates as a capital intensive business.
Bob is an entrepreneur and the majority shareholder of SF. He invested into SF’s first solar
farm. SF took out high-interest bank loans to cover initial cash flow problems and provide
working capital. SF used internal (organic) growth over the next 10 years. 5
SF rents fields from farmers. Its main capital expenditure is solar panels, which are installed
on the rented fields. The solar panels generate electricity, which SF sells to energy providers.
Solar panel technology is constantly improving.
SF operates five solar farms in country X. A team of seven engineers maintain all of SF’s
solar farms. 10
Table 1.1 shows SF’s budgeted and actual data for 2024.
Bob has identified that SF can increase its revenue by using batteries to store electricity
generated by the solar panels. This electricity can then be sold at peak times for premium
prices. This will require significant investment into battery technology. 20
Bob wants to retain control of SF but is concerned about the investment required for further
growth. In 2024 the cost of renting new farmland and purchasing solar panels increased
significantly.
ZB is a multinational battery manufacturer that is keen to start a joint venture with SF. If the
joint venture goes ahead, ZB will insist that SF uses ZB batteries in all future solar farms. 25
Question 1(b)(i)October/November 20259609/233 marks
Refer to Table 1.1. Calculate the profit variance for SF in 2024. State whether the variance is favourable or adverse.
Refers to: images/cases/w25_23_p2_Table_1_1_SF_s_annual_budgeted_and_actual_data.png
Show mark scheme
Question 1(b)(ii)October/November 20259609/233 marks
Explain one drawback to SF of using budgets.
Show mark scheme
10 more questions from 2024–2024
🔒 Unlock every Budgets question from 2024–2024
All 10 come with their mark schemes, answers and case studies, and appear in the practice tool above once you’re signed in. It’s free.
A few of them
Questions and mark schemes are from past Cambridge papers and are reproduced for revision. Topical Vault is an independent revision resource, not affiliated with or endorsed by Cambridge Assessment International Education.
AS Level Business questions by topic
Each topic opens this practice tool with only that topic’s questions, plus how often it comes up and every question on it in one list.
- Unit 1Business and its environment
- Ch 1Enterprise
- Ch 2Business structure
- Ch 3Size of business
- Ch 4Business objectives
- Ch 5Stakeholders in a business
- Unit 2Human resource management
- Ch 10Human resource management
- Ch 11Motivation
- Ch 12Management
- Ch 15Leadership
- Ch 16Human resource management strategy
- Unit 3Marketing
- Ch 17The nature of marketing
- Ch 18Market research
- Ch 19The marketing mix: product and price
- Ch 20The marketing mix: promotion and place
- Ch 21Marketing analysis
- Unit 4Operations management
- Ch 23The nature of operations
- Ch 24Inventory management
- Ch 25Capacity utilisation and outsourcing
- Ch 26Location and scale
- Ch 28Operations strategy
- Unit 5Finance and accounting
- Ch 29Business finance
- Ch 30Forecasting and managing cash flows
- Ch 31Costs
- Ch 32Budgets
- Ch 33Financial statements
- Ch 34Analysis of published accounts