Joel owns a business that specialises in decorating offices. In 2008 Joel's business carried out a contract to redecorate the offices of Yinvesco. The work took three months to complete. Yinvesco then took a further two months to pay the account and deducted 15% because they said that not all the work had been completed satisfactorily. Joel was very unhappy about this because the contract only had a small profit margin. “I base my price on full costs including overheads and add on 10%" he said.

1. (a)Identify the pricing method used by Joel's business.[2]
2. (b)Explain what is meant by 'a small profit margin'.[2]
3. (c)Explain two reasons why Joel's business might have experienced cash flow problems when carrying out the Yinvesco contract.[4]
4. (d)Identify three factors Joel should consider when choosing a paint supplier and explain why each factor is important.[6]
5. (e)Do you think that Joel should use a different pricing method for his business? Justify your answer.[6]