IGCSE Business: Quality of goods and services and Location decisions (Cambridge 0264) – Practice Questions

These are original questions written for Marlbridge, for revision and practice on this content. They are not reproduced past-paper questions, and they do not replicate the exam’s exact structure, question count or mark tariffs – examination boards hold copyright in their own papers. Use these alongside the official past papers from your board or school.

This set covers sections 4.5 (Quality of goods and services) and 4.6 (Location decisions) of the Cambridge IGCSE Business 0264 syllabus for examination in 2027, 2028 and 2029. Both papers are based on all the subject content. Revise first with the study guide and the revision notes. See also the course hub, the printable checklist and the free diagnostics.

Money figures are in dollars. All businesses are invented.

Questions

1. Define the term quality. [2]

2. State two reasons why quality is important to a business. [2]

3. Distinguish between quality control and quality assurance. [4]

4. Birchmere Candles makes a batch of 800 candles. An inspector tests a sample of 50 candles and finds that 4 are faulty. Each faulty candle costs 3.50 dollars to rework.

(a) Calculate the defect rate in the sample. [1] (b) Estimate how many candles in the batch are faulty. [1] (c) Calculate the estimated rework cost for the batch. [1] (d) New checks on wax suppliers are expected to cut the defect rate to 1.5%. Calculate the estimated saving on rework for a batch of 800. [3]

5. A business makes ceramic mugs and inspects every mug at the end of production. Explain one advantage and one disadvantage of this quality control. [4]

6. The Silverdene Hotel has 40 rooms. In the last week it received 6 complaints about unclean rooms. The manager checks a few rooms each afternoon and sends cleaners back to rooms that fail. The owner has a limited budget but wants a reputation for reliability. Recommend and justify whether the hotel should rely on quality control or move to quality assurance. [6]

7. Identify two factors that may influence the location of a manufacturing business. [2]

8. The owner of Lanternside Opticians is choosing between a unit on a busy main street and a cheaper unit on an out-of-town retail park with free parking. Explain two factors the owner should consider when choosing the location. [4]

9. Fernvale Bakery needs five bakers and can choose between two sites. Site A has rent of 36,000 a year, a wage of 23,000 a year per baker and transport costs of 9,000 a year. Site B has rent of 24,000 a year, a wage of 26,500 a year per baker and transport costs of 15,000 a year.

(a) Calculate the total annual cost of each site. [3] (b) Calculate how much cheaper one site is than the other. [1] (c) State one factor, not shown in the figures, that the owner should consider before choosing. [1]

10. A business is thinking about locating its factory in another country. Explain two factors it could consider when deciding which country to choose. [4]

11. Ravenmoor Print produces 60,000 books a year at home. Labour and shipping together cost 4.40 dollars per book. It is considering moving production to Country Z, where labour costs 2.10 dollars per book and shipping costs 1.60 dollars per book. Country Z has fewer trained print workers, a government that has changed its trade rules twice in three years and a currency that has fallen in value.

(a) Calculate the annual saving in labour and shipping costs from moving production to Country Z. [3] (b) Recommend and justify whether Ravenmoor Print should move to Country Z. [5]

12. Pellmark Biscuits makes 5,000 packs of biscuits a week and sells them as a premium gift brand. At present 3% of packs are faulty and are scrapped at a cost of 2.40 dollars each. Last month a gift shop chain cancelled an order after receiving a damaged batch. The owner is considering a quality assurance programme, with training and supplier checks, costing 90 dollars a week. It is expected to cut faulty packs to 1%.

(a) Calculate the present weekly cost of faulty packs. [2] (b) Calculate the expected net weekly saving from the programme. [3] (c) Recommend and justify whether Pellmark Biscuits should introduce the programme. [5]

Answers

1. Quality is how well a good or service meets the needs [1] and expectations of the customer [1]. [2] Examiner insight: A definition earns credit when it refers to the customer. “Very good” or “high standard” alone does not say what the standard is measured against.

2. Any two from: it encourages customers to buy again; it protects the reputation or brand; it reduces waste, returns and complaints; it can support a higher price. One mark each [1] [1]. [2] Examiner insight: State asks for two clear points, so a long explanation adds nothing. Two versions of the same point, such as “more sales” and “more customers”, show only one idea, so choose two different reasons.

3. Quality control checks goods or services, usually after production, to find faults [1], whereas quality assurance aims to prevent faults happening [1]. Quality control is carried out by inspectors at the end or at checkpoints [1], whereas quality assurance involves every employee and every stage, such as suppliers and training [1]. [4] Examiner insight: Distinguish needs a contrast in the same sentence, such as “whereas”. Describing each approach in separate paragraphs without a comparison leaves the difference for the examiner to find.

4. (a) 4 / 50 x 100 = 8% [1]. [1] (b) 8% x 800 = 64 candles [1]. [1] (c) 64 x 3.50 = 224 dollars [1]. [1] (d) Faulty candles = 1.5% x 800 = 12 [1]. Rework cost = 12 x 3.50 = 42 dollars [1]. Saving = 224 - 42 = 182 dollars [1]. [3] Examiner insight: Show each step, so that a slip in one part can be separated from later working. State the units in the final figure of part (d).

5. Advantage: it stops faulty mugs reaching customers [1], so complaints and damage to the reputation are reduced [1]. Disadvantage: faults are found only after materials and labour have been used [1], so the cost of making the faulty mugs is already wasted [1]. [4] Examiner insight: Explain needs a point plus a consequence. A bare statement such as “it is expensive” says less than a reason.

6. Recommend quality assurance [1]. The hotel is already checking rooms after the cleaning and has still had 6 complaints in a week, which shows checking afterwards is not preventing faults [1]. Assurance would set cleaning standards, train cleaners and make each cleaner responsible for the finished room [1], so fewer rooms would fail and the reputation for reliability would improve [1]. The drawback is the cost of training and time to build new habits, which is a concern on a limited budget [1]. Repeat bookings and fewer repeat cleans could repay the cost, so assurance is the better long-term choice [1]. [6] Examiner insight: A strong answer picks one approach, uses facts from the stem (6 complaints, limited budget, reputation) and weighs a drawback. Describing both methods without choosing one does not answer the question.

7. Any two from: cost of land or premises; availability and cost of labour; nearness to raw materials; nearness to customers; transport links; government grants. One mark each [1] [1]. [2] Examiner insight: Identify needs only the factor. Writing “cost” alone is vague, so say what cost, for example “rent of the factory”.

8. Factor 1: footfall on the main street [1], because passers-by may walk in without planning to, which raises sales although the rent is higher [1]. Factor 2: parking and access at the retail park [1], because customers who drive can visit easily and stay longer, which may make up for fewer passers-by [1]. [4] Examiner insight: Each factor needs a link to this business. “Rent is important” scores less than comparing the rent with the sales it could bring.

9. (a) Site A: wages = 5 x 23,000 = 115,000 [1]; total = 36,000 + 115,000 + 9,000 = 160,000 [1]. Site B: wages = 5 x 26,500 = 132,500; total = 24,000 + 132,500 + 15,000 = 171,500 [1]. [3] (b) 171,500 - 160,000 = 11,500 cheaper at Site A [1]. [1] (c) Any one from: nearness to customers; skills of the workforce; room to expand; competition nearby [1]. [1] Examiner insight: Multiply the wage by the number of bakers. Using one baker’s pay makes both totals wrong.

10. Factor 1: labour costs and skills [1], because lower wages cut the cost of each unit, though a less skilled workforce could affect quality [1]. Factor 2: political stability or government attitude [1], because stable rules and grants make planning easier, while sudden changes could raise costs or put the investment at risk [1]. [4] Examiner insight: Explain needs an effect on the business. Naming factors such as wages and tax without saying how each changes the decision leaves the second point in each pair unearned.

11. (a) Home cost = 60,000 x 4.40 = 264,000 [1]. Country Z cost = 60,000 x (2.10 + 1.60) = 60,000 x 3.70 = 222,000 [1]. Saving = 264,000 - 222,000 = 42,000 dollars a year [1]. [3] (b) Recommend not moving all production yet [1]. Moving would save 42,000 dollars a year, about 16% of the current cost of 264,000 [1]. However, Country Z has fewer trained print workers, so quality could fall and training costs could rise [1]. Changing trade rules and a falling currency make costs hard to predict, so part or all of the saving could be lost [1]. The saving is real but the risks are large, so a trial on part of the output is safer [1]. [5] Examiner insight: Use the figure from part (a) in the judgement and weigh it against the stem’s risks. A recommendation with no saving or no risk reads as unsupported.

12. (a) Faulty packs = 3% x 5,000 = 150 [1]. Cost = 150 x 2.40 = 360 dollars [1]. [2] (b) Faulty packs after = 1% x 5,000 = 50, costing 50 x 2.40 = 120 dollars [1]. Saving on faults = 360 - 120 = 240 dollars [1]. Net saving = 240 - 90 = 150 dollars a week [1]. [3] (c) Recommend introducing it [1]. It pays for itself, with a net saving of 150 dollars a week, so it lowers costs [1]. Pellmark sells a premium gift product and has already lost an order after a damaged batch, so preventing faults protects its reputation and its customers’ trust [1]. Training and supplier checks also build quality in at every stage, rather than finding faults too late [1]. The 1% target is only an expectation, so the owner should review the fault rate after a few months [1]. [5] Examiner insight: Part (b) needs the programme cost subtracted from the saving, so stopping at 240 leaves the answer incomplete. In part (c), the money result and the brand point together make the justification.

Where marks are usually lost

• Defining quality without mentioning customer needs or expectations.
• Describing quality control as if it prevents faults rather than finds them.
• Not using facts from the stem when asked to recommend and justify.
• Stopping at a list of location factors without saying how they affect the business.
• Forgetting to multiply a wage by the number of workers, or to include every cost.
• Forgetting to subtract the cost of a programme from the savings it creates.
• Recommending the cheapest country without weighing skills, stability or exchange-rate risk.
• Giving a recommendation with no drawback or no final decision.

Frequently asked questions

Are these Cambridge IGCSE Business 0264 past paper questions? No. They are original questions written for Marlbridge on sections 4.5 (Quality of goods and services) and 4.6 (Location decisions), not reproduced past-paper questions. Use them alongside the official past papers from your board or school.

How do you define quality so that it earns the marks? Refer to the customer: quality is how well a good or service meets what the customer expects and needs. Words such as “very good” or “high standard” alone do not say what the standard is measured against.

What is the most common mistake in location questions? Stopping at a list of location factors without saying how each one affects the business in the question. Each factor needs a link to the case, such as comparing a site’s rent with the sales it could bring.

How do you answer a “recommend and justify” question on quality control or quality assurance? Choose one approach, use facts from the stem such as the number of complaints, the budget or the importance of reputation, and weigh a drawback. Describing both methods without choosing one does not answer the question.

What do you need to include when working out the gain from a quality programme? Subtract the cost of the programme from the savings it creates, and show each step with units. Stopping at the gross saving leaves the answer incomplete.

Next steps

• Review the study guide and the revision notes.
• Return to the course hub and the printable checklist.
• Try all free 10-minute diagnostics.
• Book a free trial class.

Official syllabus

Aligned to sections 4.5 and 4.6 of the Cambridge IGCSE Business 0264 syllabus for examination in 2027, 2028 and 2029, published by Cambridge University Press & Assessment (Cambridge International Education).