AQA AS Business 7131/2 Paper 2 (Business 2)
Section 1: Calculations & Financial Ratios (Questions 1–20)
1. If total revenue is £105,000 and quantity sold is 3,000 units, what is the selling price per unit?
A) £25
B) £30
C) £35
D) £40
Answer: C – £105,000 ÷ 3,000 = £35.
2. Total fixed costs = £5,700, total variable costs = £17,250. What are total costs?
A) £11,550
B) £22,950
C) £23,950
D) £17,250
Answer: B – £5,700 + £17,250 = £22,950.
3. Contribution per unit = selling price – ?
A) Fixed cost per unit
B) Variable cost per unit
C) Total cost per unit
D) Overhead cost
Answer: B – Contribution = SP – VC.
4. If contribution per unit = £10, and fixed costs = £5,000, what is the break-even point in units?
A) 500
B) 1,000
C) 5,000
D) 50,000
Answer: A – £5,000 ÷ £10 = 500 units.
5. A business has sales revenue of £200,000 and cost of sales of £120,000. What is gross
profit?
A) £80,000
B) £120,000
C) £200,000
D) £320,000
Answer: A – £200,000 – £120,000 = £80,000.
6. Gross profit margin = (gross profit ÷ revenue) × 100. If GP = £80,000, revenue = £200,000,
what is GPM?
A) 40%
,B) 60%
C) 80%
D) 20%
Answer: A – (£80,000 ÷ £200,000) × 100 = 40%.
7. Net profit margin = (net profit ÷ revenue) × 100. Net profit = £50,000, revenue = £200,000.
What is NPM?
A) 20%
B) 25%
C) 30%
D) 40%
Answer: B – (£50,000 ÷ £200,000) × 100 = 25%.
8. Current ratio = current assets ÷ current liabilities. Current assets = £120,000, current liabilities
= £80,000. What is the current ratio?
A) 1:1
B) 1.2:1
C) 1.5:1
D) 2:1
Answer: C – £120,000 ÷ £80,000 = 1.5.
9. A current ratio of 1.5:1 suggests:
A) Liquidity problems
B) Healthy liquidity
C) Over-trading
D) High gearing
Answer: B – Between 1.5 and 2 is generally acceptable.
10. Gearing ratio = (long-term liabilities ÷ capital employed) × 100. Long-term liabilities =
£200,000, capital employed = £500,000. What is gearing?
A) 20%
B) 40%
C) 50%
D) 60%
Answer: B – (£200,000 ÷ £500,000) × 100 = 40%.
11. High gearing (>50%) means a business is:
A) Low risk
B) Dependent on debt finance
C) Highly profitable
D) Liquid
Answer: B – More than 50% long-term debt is high risk.
12. If sold 1,000 units, SP = £35, VC per unit = £10. What is total contribution?
, A) £10,000
B) £25,000
C) £35,000
D) £45,000
Answer: B – (£35 – £10) × 1,000 = £25,000.
13. Fixed costs = £5,700, contribution per unit = £25. How many units to break even?
A) 200
B) 228
C) 250
D) 300
Answer: B – £5,700 ÷ £25 = 228 units.
14. If actual sales = 500 units, break-even = 228 units, what is margin of safety?
A) 228 units
B) 250 units
C) 272 units
D) 500 units
Answer: C – 500 – 228 = 272 units.
15. Total variable costs = £17,250 for 3,000 units. Variable cost per unit = ?
A) £5.00
B) £5.75
C) £6.00
D) £17.25
Answer: B – £17,250 ÷ 3,000 = £5.75.
16. If PED = –0.5, a 10% price increase will cause quantity demanded to:
A) Increase by 5%
B) Decrease by 5%
C) Increase by 20%
D) Decrease by 20%
Answer: B – Inelastic: –0.5 × 10% = –5%.
17. A PED of –0.5 means demand is:
A) Perfectly elastic
B) Elastic
C) Inelastic
D) Unit elastic
Answer: C – Less than 1 (ignoring minus sign) = inelastic.
18. If income elasticity of demand (YED) = +1.5, the product is:
A) Inferior good
B) Necessity
Section 1: Calculations & Financial Ratios (Questions 1–20)
1. If total revenue is £105,000 and quantity sold is 3,000 units, what is the selling price per unit?
A) £25
B) £30
C) £35
D) £40
Answer: C – £105,000 ÷ 3,000 = £35.
2. Total fixed costs = £5,700, total variable costs = £17,250. What are total costs?
A) £11,550
B) £22,950
C) £23,950
D) £17,250
Answer: B – £5,700 + £17,250 = £22,950.
3. Contribution per unit = selling price – ?
A) Fixed cost per unit
B) Variable cost per unit
C) Total cost per unit
D) Overhead cost
Answer: B – Contribution = SP – VC.
4. If contribution per unit = £10, and fixed costs = £5,000, what is the break-even point in units?
A) 500
B) 1,000
C) 5,000
D) 50,000
Answer: A – £5,000 ÷ £10 = 500 units.
5. A business has sales revenue of £200,000 and cost of sales of £120,000. What is gross
profit?
A) £80,000
B) £120,000
C) £200,000
D) £320,000
Answer: A – £200,000 – £120,000 = £80,000.
6. Gross profit margin = (gross profit ÷ revenue) × 100. If GP = £80,000, revenue = £200,000,
what is GPM?
A) 40%
,B) 60%
C) 80%
D) 20%
Answer: A – (£80,000 ÷ £200,000) × 100 = 40%.
7. Net profit margin = (net profit ÷ revenue) × 100. Net profit = £50,000, revenue = £200,000.
What is NPM?
A) 20%
B) 25%
C) 30%
D) 40%
Answer: B – (£50,000 ÷ £200,000) × 100 = 25%.
8. Current ratio = current assets ÷ current liabilities. Current assets = £120,000, current liabilities
= £80,000. What is the current ratio?
A) 1:1
B) 1.2:1
C) 1.5:1
D) 2:1
Answer: C – £120,000 ÷ £80,000 = 1.5.
9. A current ratio of 1.5:1 suggests:
A) Liquidity problems
B) Healthy liquidity
C) Over-trading
D) High gearing
Answer: B – Between 1.5 and 2 is generally acceptable.
10. Gearing ratio = (long-term liabilities ÷ capital employed) × 100. Long-term liabilities =
£200,000, capital employed = £500,000. What is gearing?
A) 20%
B) 40%
C) 50%
D) 60%
Answer: B – (£200,000 ÷ £500,000) × 100 = 40%.
11. High gearing (>50%) means a business is:
A) Low risk
B) Dependent on debt finance
C) Highly profitable
D) Liquid
Answer: B – More than 50% long-term debt is high risk.
12. If sold 1,000 units, SP = £35, VC per unit = £10. What is total contribution?
, A) £10,000
B) £25,000
C) £35,000
D) £45,000
Answer: B – (£35 – £10) × 1,000 = £25,000.
13. Fixed costs = £5,700, contribution per unit = £25. How many units to break even?
A) 200
B) 228
C) 250
D) 300
Answer: B – £5,700 ÷ £25 = 228 units.
14. If actual sales = 500 units, break-even = 228 units, what is margin of safety?
A) 228 units
B) 250 units
C) 272 units
D) 500 units
Answer: C – 500 – 228 = 272 units.
15. Total variable costs = £17,250 for 3,000 units. Variable cost per unit = ?
A) £5.00
B) £5.75
C) £6.00
D) £17.25
Answer: B – £17,250 ÷ 3,000 = £5.75.
16. If PED = –0.5, a 10% price increase will cause quantity demanded to:
A) Increase by 5%
B) Decrease by 5%
C) Increase by 20%
D) Decrease by 20%
Answer: B – Inelastic: –0.5 × 10% = –5%.
17. A PED of –0.5 means demand is:
A) Perfectly elastic
B) Elastic
C) Inelastic
D) Unit elastic
Answer: C – Less than 1 (ignoring minus sign) = inelastic.
18. If income elasticity of demand (YED) = +1.5, the product is:
A) Inferior good
B) Necessity
