Reference no: EM132900914

Case scenario

You want to start a restaurant business in Oman. The proposed business will have a variety of fast foods. The cost components include materials, and overheads based on sales unit. Fixed cost include salary and rent of the premise. Materials = $ 10 per unit Overheads = $ 20 per unit Sales = $ 50 per unit Fixed cost = $ 20,000 per month Materials include vegetables, groceries, and poultry products. The company will buy materials from the local suppliers daily. Suppliers will be paid after 60 days. Customers of the firm are youngers and families. Customers will pay immediately and therefore there is no credit sales. Noncurrent assets for the proposed firm include furniture, machinery, and equipment.

1. What is the difference between step-wise cost and curvilinear cost? Elaborate the methods to measure the cost behavior?

2. The proposed business comes under which industry type? Write a brief discussion about the length of operating cycle and capital investment cycle for the proposed business? Use illustrations from the case scenario to support your answer.

3. Do you feel that the firm will be effectively managing its operating and capital investment cycle? Which among these are favourable and unfavourable for the firm? Justify.

Attachment:- Chapter 4-Theoretical Background-Implications on COST STANDARDS.rar

Attachment:- Chapter 6-Costing Approach.rar