EDEXCEL A LEVEL BUSINESS PAPER 2 FINAL
PAPER 2026 QUESTIONS AND ANSWERS
GRADED A+
◉What are sales forecasts. Answer: The process of estimating the
future sales of the business
◉What are sales forecasts used for. Answer: Helps the business
decide if they need to increase capacity/employ more workers
Allows the business to work out cash flow forecast
Helps use of extension strategies in product life cycle
◉What factors affect sales forecasts. Answer: Consumer trends
Economic variables - e.g. interest and exchange rates
Competitors actions
◉What are the difficulties of sales forecasting. Answer: Dynamic
markets - can make it unpredictable
Unsuitable for start up businesses
PED and YED will impact sales, making the forecast more likely to be
inaccurate
,◉What is the formula for revenue. Answer: Price x quantity sold
◉What is the formula for sales volume. Answer: Revenue / selling
price
◉What are fixed costs. Answer: costs that do not vary with output
◉What are variable costs. Answer: costs that change as output
changes
◉What is the formula for total variable costs. Answer: Variable cost
per unit x number of units
◉What is the formula for total costs. Answer: Fixed costs + variable
costs
◉What is the formula for contribution. Answer: Selling price -
variable cost per unit
◉What is break even point. Answer: A break-even point is the
quantity at which total revenue and total cost are equal.
, ◉What is the formula for break even point. Answer: Fixed costs /
contribution
◉What is margin of safety. Answer: The difference between actual
sales and break even level of sales
◉What are the limitations of break even analysis. Answer: Assumes
all output is sold
Assumes prices are the same
Costs may vary meaning the chart would have to be updated
frequently
Doesn't take into account economies of scale
◉What is a budget. Answer: An agreed spending limit within the
business
◉What is a historical budget. Answer: A budget is set using the
previous years budget/financial figures
◉What is a zero based budget. Answer: Not based on previous data
but instead on the potential performance, so managers have to
justify what spending will be used for
PAPER 2026 QUESTIONS AND ANSWERS
GRADED A+
◉What are sales forecasts. Answer: The process of estimating the
future sales of the business
◉What are sales forecasts used for. Answer: Helps the business
decide if they need to increase capacity/employ more workers
Allows the business to work out cash flow forecast
Helps use of extension strategies in product life cycle
◉What factors affect sales forecasts. Answer: Consumer trends
Economic variables - e.g. interest and exchange rates
Competitors actions
◉What are the difficulties of sales forecasting. Answer: Dynamic
markets - can make it unpredictable
Unsuitable for start up businesses
PED and YED will impact sales, making the forecast more likely to be
inaccurate
,◉What is the formula for revenue. Answer: Price x quantity sold
◉What is the formula for sales volume. Answer: Revenue / selling
price
◉What are fixed costs. Answer: costs that do not vary with output
◉What are variable costs. Answer: costs that change as output
changes
◉What is the formula for total variable costs. Answer: Variable cost
per unit x number of units
◉What is the formula for total costs. Answer: Fixed costs + variable
costs
◉What is the formula for contribution. Answer: Selling price -
variable cost per unit
◉What is break even point. Answer: A break-even point is the
quantity at which total revenue and total cost are equal.
, ◉What is the formula for break even point. Answer: Fixed costs /
contribution
◉What is margin of safety. Answer: The difference between actual
sales and break even level of sales
◉What are the limitations of break even analysis. Answer: Assumes
all output is sold
Assumes prices are the same
Costs may vary meaning the chart would have to be updated
frequently
Doesn't take into account economies of scale
◉What is a budget. Answer: An agreed spending limit within the
business
◉What is a historical budget. Answer: A budget is set using the
previous years budget/financial figures
◉What is a zero based budget. Answer: Not based on previous data
but instead on the potential performance, so managers have to
justify what spending will be used for
