AQA A-Level Business 2027 Predicted Practice Paper — Paper 1

Answer ALL questions. Write your answers in the spaces provided. You must write down all the stages in your working.

Section A

Multiple choice questions. Answer all questions in Sections A and B.

• 1

  Question SECTION-A1 (1 mark)

  Which of the following is the most likely benefit to a business of adopting a flatter organisational structure?

  A. Faster vertical communication and greater delegationB. A wider span of control that always reduces workloadsC. More layers of hierarchy for closer supervisionD. A guaranteed increase in short-term profit

  (Total for Question SECTION-A1 is 1 mark)
• 2

  Question SECTION-A2 (1 mark)

  A firm has fixed costs of GBP 40,000, sells its product for GBP 20 and has variable costs of GBP 12 per unit. What is its break-even output in units?

  A. 2,000 unitsB. 3,333 unitsC. 5,000 unitsD. 8,000 units

  (Total for Question SECTION-A2 is 1 mark)
• 3

  Question SECTION-A3 (1 mark)

  Which of the following best describes the price elasticity of demand for a product with many close substitutes?

  A. Perfectly inelasticB. Relatively price inelasticC. Relatively price elasticD. Unitary and unaffected by substitutes

  (Total for Question SECTION-A3 is 1 mark)
• 4

  Question SECTION-A4 (1 mark)

  A business calculates its gross profit margin as 45% and its operating profit margin as 12%. Which statement is the most valid interpretation?

  A. Overheads and other operating expenses absorb a large share of gross profitB. The business is making a net loss on every saleC. Cost of sales exceeds revenueD. The business has no fixed costs

  (Total for Question SECTION-A4 is 1 mark)
• 5

  Question SECTION-A5 (1 mark)

  Which of the following is an example of a business pursuing a differentiation strategy according to Porter?

  A. Competing solely by charging the lowest price in the marketB. Offering a unique, high-quality product that justifies a premium priceC. Focusing only on a very narrow niche with the cheapest productD. Copying rivals' products exactly to avoid standing out

  (Total for Question SECTION-A5 is 1 mark)
• 6

  Question SECTION-A6 (1 mark)

  A retailer's inventory turnover fell from 9 times to 6 times per year. Which is the most likely consequence?

  A. Stock is sold faster, improving cash flowB. Stock is held for longer, increasing storage and obsolescence riskC. Gross profit margin must have risenD. The current ratio has automatically improved

  (Total for Question SECTION-A6 is 1 mark)
• 7

  Question SECTION-A7 (1 mark)

  Which of the following would most directly increase a firm's labour productivity?

  A. Raising basic pay with no other changeB. Investing in staff training and improved technologyC. Increasing the total number of employees onlyD. Extending customer opening hours

  (Total for Question SECTION-A7 is 1 mark)
• 8

  Question SECTION-A8 (1 mark)

  According to Herzberg's two-factor theory, which of the following is a motivator rather than a hygiene factor?

  A. Company pay policyB. Working conditionsC. Recognition for achievementD. Job security

  (Total for Question SECTION-A8 is 1 mark)
• 9

  Question SECTION-A9 (1 mark)

  A business has current assets of GBP 180,000 and current liabilities of GBP 120,000. What is its current ratio?

  A. 0.67:1B. 1.5:1C. 2.0:1D. 3.0:1

  (Total for Question SECTION-A9 is 1 mark)
• 10

  Question SECTION-A10 (1 mark)

  Which of the following is most likely to be a drawback of a business setting quantitative objectives that are too ambitious?

  A. Employees are always more motivated by unrealistic targetsB. Staff may become demotivated if targets appear unachievableC. Objectives can never be measuredD. It guarantees the business will meet its targets

  (Total for Question SECTION-A10 is 1 mark)
• 11

  Question SECTION-A11 (1 mark)

  A manufacturer switches from a job production method to flow production. Which outcome is most likely?

  A. Higher unit costs due to bespoke workB. Lower unit costs from economies of scale but less product customisationC. Greater flexibility for one-off customer ordersD. A fall in output volume

  (Total for Question SECTION-A11 is 1 mark)
• 12

  Question SECTION-A12 (1 mark)

  Which of the following best describes 'window dressing' in the context of published accounts?

  A. Presenting accounts to make the financial position look more favourable than it isB. Displaying products attractively in a shop windowC. Publishing accounts earlier than legally requiredD. Reducing all costs to zero

  (Total for Question SECTION-A12 is 1 mark)
• 13

  Question SECTION-A13 (1 mark)

  A firm's total revenue rises when it lowers its price. This indicates that demand for its product is:

  A. Price inelasticB. Price elasticC. Perfectly inelasticD. Of unitary elasticity

  (Total for Question SECTION-A13 is 1 mark)
• 14

  Question SECTION-A14 (1 mark)

  Which of the following is the clearest example of an external economy of scale?

  A. A firm buying raw materials in bulk at a discountB. A growth of skilled labour and suppliers in the local industry clusterC. Spreading marketing costs over higher outputD. Using larger, more efficient machinery

  (Total for Question SECTION-A14 is 1 mark)
• 15

  Question SECTION-A15 (1 mark)

  According to the product life cycle, which extension strategy is most appropriate for a product entering the maturity stage?

  A. Withdrawing the product immediatelyB. Finding new markets or slightly modifying the product to prolong salesC. Ceasing all promotion to cut costsD. Raising price sharply to maximise short-term profit

  (Total for Question SECTION-A15 is 1 mark)

Section B

Short-answer and calculation questions. Answer all questions in Sections A and B.

• 1

  Question SECTION-B1 (4 marks)

  Larkmead Foods Ltd sells 60,000 units of a chilled dessert each year at a price of GBP 3.50 per unit. Variable costs are GBP 1.40 per unit and annual fixed costs are GBP 84,000. Calculate (a) the total annual contribution, and (b) the annual profit. Show your workings.

  (Total for Question SECTION-B1 is 4 marks)
• 2

  Question SECTION-B2 (5 marks)

  Explain one benefit and one drawback to Larkmead Foods Ltd of using a just-in-time (JIT) approach to stock management.

  (Total for Question SECTION-B2 is 5 marks)
• 3

  Question SECTION-B3 (6 marks)

  Analyse how an increase in interest rates might affect the investment decisions of a medium-sized manufacturing business.

  (Total for Question SECTION-B3 is 6 marks)
• 4

  Question SECTION-B4 (6 marks)

  A business is deciding between two mutually exclusive projects. Project X has a payback period of 2 years 3 months and an average rate of return (ARR) of 14%. Project Y has a payback period of 3 years 6 months and an ARR of 22%. Recommend, with justification, which project the business should choose.

  (Total for Question SECTION-B4 is 6 marks)
• 5

  Question SECTION-B5 (5 marks)

  Explain how effective workforce planning could help a growing technology firm to meet its corporate objectives.

  (Total for Question SECTION-B5 is 5 marks)
• 6

  Question SECTION-B6 (9 marks)

  Assess the usefulness of ratio analysis to the stakeholders of a public limited company (plc).

  (Total for Question SECTION-B6 is 9 marks)

Section C

Essay question - choice of one from two. Answer all questions in Sections A and B.

• 1

  Question SECTION-C1 (25 marks)

  Brightwave Appliances plc is a UK manufacturer of household kitchen appliances with annual revenue of GBP 480 million. Facing rising raw-material costs and intense competition from lower-priced overseas rivals, its board is considering relocating a large part of its production from the UK to a lower-cost country in South-East Asia. The Chief Executive argues this would cut unit costs by an estimated 25% and protect margins. Others on the board warn about the impact on quality control, the firm's 'Made in Britain' brand image, redundancy costs, and relationships with UK-based stakeholders. To what extent should Brightwave Appliances plc relocate the majority of its production overseas? Justify your answer.

  (Total for Question SECTION-C1 is 25 marks)

Section D

Essay question - choice of one from two. Answer all questions in Sections A and B.

• 1

  Question SECTION-D1 (25 marks)

  Fenwick & Rowe Ltd is a family-owned chain of 24 mid-market fashion clothing stores across the UK. Sales have stagnated for three years as customers increasingly shop online with digital-first competitors. A newly appointed managing director wants to lead a major change programme: closing eight of the weakest stores, investing heavily in an e-commerce platform and data analytics, and moving from an autocratic to a more democratic leadership style to encourage innovation from staff. Some long-serving managers resist the changes. To what extent is a change in leadership style the most important factor in successfully transforming Fenwick & Rowe Ltd? Justify your answer.

  (Total for Question SECTION-D1 is 25 marks)