OCR A Level Business: Forecasting (H431) – 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.

These questions cover Forecasting in the Business objectives and strategy area of study of the OCR A Level Business (H431) specification, Version 2.1 (January 2026), with final assessment in summer 2027. All businesses are invented. Study first with the study guide and revision notes. Related: objectives and strategic decisions guide, strategy revision notes, strategy practice set, course hub, checklist and free 10-minute diagnostics.

Questions

1. Explain the nature and purpose of forecasting. [4]

2. Distinguish between qualitative forecasting and quantitative forecasting. [3]

3. Describe the Delphi technique. [3]

4. Describe one unstructured method of qualitative forecasting. [2]

5. Gawthorpe Printers expects to sell 5,000 leaflet packs next year at £3.20 each. Variable cost is £1.90 a pack and fixed costs are £4,200.

(a) Calculate the forecast profit. [3] (b) Sales volume is then forecast to rise by 10%, with price and costs unchanged. Calculate the new forecast profit. [2]

6. Tanfield Toys recorded annual sales (£000): 2018: 67, 2019: 73, 2020: 80, 2021: 77, 2022: 84, 2023: 91, 2024: 87. Earlier years were 64 (2016) and 70 (2017). The three-year moving average trend values for 2017 to 2023 are 67.0, 70.0, 73.3, 76.7, 80.3, 84.0 and 87.3.

(a) Calculate the three-year moving average for 2021 and check it against the value given. [2] (b) Calculate the cyclical variation for 2020. [2] (c) Extrapolate the trend to forecast the trend value for 2025. [2]

7. Lindeth Bakery forecasts the following for January to March (£). Opening cash in January is 3,000.

	January	February	March
Cash in	14,000	15,500	13,000
Cash out	12,800	16,900	12,400

(a) Calculate the forecast closing balance for each month. [3] (b) Explain one reason why this forecast may prove inaccurate. [2]

8. Rushbeck Garden Centre plotted weekly sales (£000) against average weekly temperature (°C) for 20 weeks. The correlation is +0.88 and the line of best fit is sales = 2.1 + 0.45 × temperature.

(a) Interpret the correlation. [2] (b) Use the line to forecast sales in a week averaging 18°C. [2] (c) Explain why the correlation does not prove that warm weather causes higher sales. [2]

9. Tanfield Toys has strong sales each December and its annual sales also follow a pattern of rises and falls over several years. Analyse how seasonal and cyclical variations affect its forecasting. [6]

10. Gawthorpe Printers plans to launch recycled-paper packaging, a product with no sales history. The owner will rely on intuition. Evaluate whether the owner should use structured qualitative methods instead. [8]

11. Rushbeck Garden Centre’s three-year moving average trend (£000) was 140 (2019), 146, 153, 158 and 165 (2023). The owner wants to build a new greenhouse now, based on this trend.

(a) Calculate the average annual change in the trend and extrapolate the trend value for 2025. [2] (b) Evaluate the usefulness of time series analysis to Rushbeck in making this decision. [4] (c) Recommend and justify how Rushbeck should respond to the forecast, commenting on the importance of accurate forecasting. [4]

Answers

1. A forecast is an informed estimate of a future variable such as sales, costs or cash flow [1], built from past data or judgement [1]. Its purpose is to reduce uncertainty [1] so the business can plan, for example staffing, stock or finance [1]. [4] Examiner insight: An explanation usually earns more when it gives a reason for each point (the purpose) rather than only a definition.

2. Qualitative forecasting uses opinion, judgement and experience [1]. Quantitative forecasting uses numerical data and calculation [1]. The distinction is the basis: judgement versus past figures, with a clear contrast between the two [1]. [3] Examiner insight: “Distinguish” needs both items and a difference; describing each separately without contrast can leave the last point unearned.

3. A panel of experts gives forecasts separately, often anonymously [1]. A coordinator circulates a summary of the answers [1]. Experts revise their views over several rounds until opinion converges on a consensus forecast [1]. [3] Examiner insight: Naming the stages (separate answers, feedback, repeated rounds) is what turns a vague description into a full one.

4. Brainstorming: a group produces as many ideas or predictions as possible without early criticism [1] and then reviews them to reach a forecast [1]. (Intuition would also be acceptable: a manager relies on gut feeling built from experience, with no formal process or data.) [2] Examiner insight: Choose one method and stay with it; mixing two methods in one answer wastes time.

5. (a) Revenue = 5,000 × 3.20 = £16,000 [1]. Variable costs = 5,000 × 1.90 = £9,500 [1]. Profit = 16,000 − 9,500 − 4,200 = £2,300 [1]. (b) Units 5,500: revenue £17,600 and variable costs £10,450 [1]. Profit = 17,600 − 10,450 − 4,200 = £2,950 [1]. [5] Examiner insight: Show each stage of the calculation, because a slip in one line is easier to credit if the working is visible.

6. (a) (80 + 77 + 84) ÷ 3 [1] = 80.3, which agrees with the value given (about £80,300) [1]. (b) Cyclical variation = actual − trend [1] = 80 − 76.7 = +3.3 (£3,300 above trend) [1]. (c) Average annual change in trend = (87.3 − 67.0) ÷ 6 ≈ 3.4 [1]. Trend 2025 = 87.3 + 2 × 3.4 ≈ 94.1 (about £94,100) [1]. [6] Examiner insight: Stating the direction (above or below trend) and the unit makes a cyclical figure meaningful and avoids sign confusion.

7. (a) January: 3,000 + 14,000 − 12,800 = 4,200 [1]. February: 4,200 + 15,500 − 16,900 = 2,800 [1]. March: 2,800 + 13,000 − 12,400 = 3,400 [1]. (b) Customers may pay later than assumed, so cash in falls [1], leaving less cash than forecast and possibly a shortfall because costs are paid on time (or a rise in flour prices raises cash out) [1]. [5] Examiner insight: A reason earns more when it is tied to the business and followed by its effect on the figures.

8. (a) A strong [1] positive correlation: weeks with higher temperatures tend to have higher sales [1]. (b) 2.1 + 0.45 × 18 [1] = 10.2, so about £10,200 [1]. (c) Correlation shows association only [1]. Another factor, such as school holidays or a promotion, may raise both temperature-linked footfall and sales [1]. [6] Examiner insight: Naming a specific alternative cause gives the “not causation” point substance.

9. Seasonal variation is a regular pattern within a year, such as the December peak [1]. Cyclical variation is a longer pattern over several years linked to the economic cycle [1]. If Tanfield divided an annual forecast evenly by month, it would underestimate December and overestimate quiet months [1], causing stock shortages and idle staff [1]. If it extrapolated a rising phase of the cycle, it would overestimate future sales [1], because toy spending may fall in a downturn [1]. [6] Examiner insight: Analysis usually earns credit by linking each variation to a consequence for the forecast, not only by defining it.

10. For: structured methods such as Delphi use several experts, so they reduce one person’s bias [1]. There is no history, so a documented process gives evidence to lenders [1]. A wrong launch could be costly, so spending on better forecasts may be justified [1]. Against: structured methods take time and cost money, which matters for a small firm [1]. Experts may share the same blind spots about a new product [1]. Intuition is quick and the owner knows the local print market [1]. Judgement: the owner should use a structured method, such as expert opinion from a packaging specialist, alongside intuition, because the launch is novel and the cost of error is high [1], provided the cost of the panel is small compared with the investment [1]. [8] Examiner insight: Evaluation questions tend to reward a reasoned conclusion that refers to the business’s circumstances, not a list of pros and cons alone.

11. (a) Average change = (165 − 140) ÷ 4 = 6.25 per year [1]. 2025 trend = 165 + 2 × 6.25 = 177.5, about £177,500 [1]. (b) For: it is objective and based on actual sales [1], and it shows a steady upward trend that supports expansion [1]. Against: it assumes the past continues and cannot predict shocks such as a recession or a competitor [1], and it gives no trend value for the latest years, so the forecast relies on extrapolation [1]. (c) Recommend phasing the greenhouse, building a smaller unit first [1], because the trend may not continue and the project is expensive to reverse [1]. Accurate forecasts matter because over-building leaves idle capacity and debt [1], which affects the owner, lenders and staff [1]. [10] Examiner insight: A recommendation is stronger when it is justified against an alternative and linked to the cost of a wrong forecast.

Where marks are usually lost

• Defining forecasting without saying what it is used for.
• Describing the Delphi technique without mentioning repeated rounds or anonymity.
• Doing a calculation without showing the stages.
• Writing the moving average against the wrong year.
• Quoting cyclical variation without stating whether it is above or below trend.
• Treating correlation as proof of cause.
• Writing a one-sided evaluation, or a conclusion that repeats earlier points.
• Giving a recommendation with no reason or no alternative.
• Answering in general terms when the question names a business and gives figures.

Frequently asked questions

Are these OCR A Level Business H431 past paper questions? No. They are original practice questions written for Marlbridge on the Forecasting content point. Use them alongside OCR’s own past papers.

Where should a moving average be placed? Against the middle year of the period it covers, so a three-year average for 2016 to 2018 belongs to 2017. Writing it against the wrong year is a common error.

How should you state a cyclical variation figure? Give its direction, above or below the trend, and its unit. That makes the figure meaningful and avoids confusion over the sign.

How do you make the “correlation is not causation” point convincingly? Name a specific alternative cause, such as good weather raising demand in the same months as advertising. A general statement that correlation does not prove cause has less substance.

What does an evaluation of a forecasting method need? A reasoned conclusion that refers to the business’s circumstances, such as whether the product has any sales history. A list of pros and cons, or a conclusion that repeats earlier points, earns less.

Next steps

• Review: revision notes and study guide.
• Wider area: objectives and strategic decisions guide.
• Course: OCR A Level Business hub and checklist.
• All free 10-minute diagnostics: diagnostics.
• Book a free trial class: trial.

Official syllabus

OCR A Level Business (H431), Version 2.1 (January 2026), published by OCR, for first assessment in 2017 with final assessment in summer 2027. Content covered: Forecasting, within the area of study Business objectives and strategy.