ICAEW ACA Certificate Level · Business Insight and Performance

Budgeting and forecasting

9 practice questions, each with the answer and an explanation.

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Random questions from this topic, one at a time. You see the answer and the explanation straight after each one.

All 9 questions

  1. A business recorded total costs of £42,000 at 3,000 units and £54,000 at 5,000 units. Using the high-low method, what is the predicted total cost at 4,200 units?
  2. Quarterly sales for four consecutive quarters were £96,000, £120,000, £114,000 and £130,000. Using a three-quarter moving average, what is the trend figure centred on the second quarter?
  3. Ice cream sales and the number of sunburn cases both rise in the summer months. What is the correct conclusion?
  4. What is the main feature of zero-based budgeting?
  5. A company moves from a top-down to a bottom-up budgeting approach. Which is the most likely benefit?
  6. A business sells on credit. 30% of customers pay in the month of sale and the remaining 70% pay in the following month. Sales were £100,000 in January, £120,000 in February and £90,000 in March. What…
  7. Budgeted sales are 5,000 units. Opening inventory is 400 units and the target closing inventory is 600 units. How many units must be produced?
  8. A business has inventory of £120,000, receivables of £250,000 and payables of £100,000. Revenue is £1,825,000, cost of sales is £730,000 and purchases are £730,000. Using a 365-day year, what is the c…
  9. Which action would most directly shorten a business's cash operating cycle?

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