Economic Cost and Accounting Cost.docx

Could have used that money to set up pick up counters

This preview shows page 1 - 2 out of 2 pages.

could have used that money to set up pick-up counters or other labour-substituting equipments. Similarly, it can be analysed that every economic cost can be considered as an opportunity cost EconomicCost = OpportunityCost Sunk Costs Sunk costs cover all expenditures that has been made and cannot be recovered. For a sunk cost, the opportunity cost is zero. For example, if a restaurant buys an equipment for a particular use and that equipment cannot be used for anything else, it is a sunk cost. On reviewing the finance of De Ja Vu, we understood that the restaurant does not have any sunk costs that stand out. Fixed and Variable Costs Fixed costs are those costs that does not vary with the level of output and can be eliminated only by going out of business. For De Ja Vu, the fixed costs would include: 1) Land and building rent
Image of page 1

Subscribe to view the full document.

2) Insurance payments 3) Decoration costs 4) Internet connection charges Variable cost change with the output of the restaurant. Assuming that the restaurant output is the count of plates served, the variable costs involved in running the restaurant are: 1) Water, phone and electricity charges 2) Air conditioning charges 3) Cooking gas, procurement of utensils and its maintenance 4) Procurement of food and beverage 5) Labour charges
Image of page 2
You've reached the end of this preview.
  • Summer '10
  • jennypaul
  • Economic cost, De Ja Vu

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern