component 1 - Business functions

Question 1

give 3 methods of budgeting

Answer 1

-budgeting according to company objectives
-budgeting according to competitor’s spending
-budgeting according to last years budget allocations

Question 2

give 3 pros of setting budgets

Answer 2

-provides quantifiable target
-informs business decision making
-motivates budget holders

Question 3

give 3 reasons for setting a budget

Answer 3

-to gain financial support
-to establish priorities
-to improve efficiency

Question 4

give 3 cons of setting a budget

Answer 4

-dependent upon predictions and forecasts
-manager may lack experience
-may be time consuming

Question 5

what is variance?

Answer 5

the difference between the budget and the actual

Question 6

what is the formula for variance?

Answer 6

variance = budget figure - actual figure

Question 7

give 2 types of variance

Answer 7

-favourable and adverse

Question 8

what is favourable variance?

Answer 8

either when income is greater than budgeted income or actual costs are lower than budgeted (favourable to the business)

Question 9

what is adverse variance?

Answer 9

when actual income is less than budgeted or actual costs are higher than budgeted (non favourable to the business)

Question 10

what is variance analysis?

Answer 10

finding reasons for any variances

Question 11

give 3 possible causes of variances

Answer 11

-actions of competitors
-actions of suppliers eg price changes
-changes in the economy

Question 12

give 3 possible responses to variances

Answer 12

-change budgets
-change suppliers
-staff training

Question 13

Give 2 types of sampling

Answer 13

quota and random

Question 14

what is quota sampling?

Answer 14

a sampling method that involves the segmentation of the population into different sub groups based on characteristics and then a number is selected from each group

Question 15

what is random sampling?

Answer 15

a sampling method where each member of the population has an equal chance of being selected

Question 15

give 2 cons of quota sampling

Answer 15

-not randomly chosen/representative
-higher levels of bias

Question 16

give 3 pros of quota sampling

Answer 16

-quick
-easy to manage
-cheaper than alternatives

Question 16

Give 2 pros of random sampling

Answer 16

-minimises bias
-simple to design and interpret

Question 17

give 2 cons of random sampling

Answer 17

-it assumes all members of the population are the same
-not always representative

Question 18

give the 4 types of businesses in the private sector

Answer 18

-PLC
-LTD
-sole trader
-partnership

Question 19

give 3 pros of the public sector

Answer 19

-help fund new businesses which boost economy
-goods/services help raise economies standard of living
-helps provide essential services/needs to all

Question 20

give 3 pros of the private sector

Answer 20

-raises profit and pays tax which helps economy
-provide jobs
-supplies and meets customer wants

Question 21

what is a social enterprise?

Answer 21

a business the trades for a social or economic purpose

Question 22

give 3 factors a business should consider when choosing where to locate

Answer 22

-proximity to market
-nearby competition
-costs