Quarky Chickens (QC) imports frozen meat, which it sells business to business (B2B) to customers in the New Zealand. In 2020, QC ran into cash-flow problems and had to use debt factoring.

QC has now solved its cash-flow problems. It operates a cost-plus (mark-up) pricing strategy and places a 100 % mark-up on the frozen meat that it purchases from suppliers.

The forecasted opening cash balance for January 2022 is $20 000.

Table 1: Forecasted data per month for QC for the first six months of 2022 (all figures in $)

The finance director is concerned that the online market for frozen meat in the UK is becoming increasingly price competitive. She believes that if suppliers raise prices in the second half of 2022, QC will have to abandon its cost-plus (mark-up) pricing strategy to be price competitive.