Hamid Anjum is owner of a growing chain of grocery stores in the Karachi, Lahore and Islamabad. Hamid's stores specialize in organic and other specialty foods (desi nuskhay, superfoods, etc.) and other specialty products, which have attracted a strong following. As his business matures, Hamid is now more interested in understanding how he can better manage the profitability of his stores. In particular, he is interested in understanding what drives the costs in his business.

REQUIRED:

A. As a potential consultant to Hamid, develop a proposal (not more than 500 words) for a consulting engagement which would focus on the profitability and cost driver issues Hamid is concerned about. The proposal should address which types of cost drivers should be studied and why.[10 Marks]

B. Generally (in situations including other than described above), what are possibleconsequencesof product-cost subsidizations?[5 Marks]

C. Generally, Why does product complexity lead to increased costs?[5 Marks]