A recently graduated business student decided to open a small internet cafe serving a variety of unusual non-alcoholic beverages from around the world.He carefully used all the pricing formulas he learned in school and set a goal to break even the first six months and make a moderate profit for the next six months at which time he would review his pricing strategies.Within a week after opening, every seat was filled and he had to replenish his beverage orders several times.At his six month review, he was devastated to find that despite huge sales, he had actually lost money.He realized it wasn't his "math" that was wrong, he had simply failed to include items such as toilet paper, paper towels, hand soap, and trash removal fees in his calculations.These costs should have appeared as __________ in his break-even analysis.
A)fixed costs
B)marginal costs
C)variable costs
D)overhead costs
E)ancillary costs

Question

Quizplus · Accepted Answer

Toilet paper, paper towels, hand soap, and trash removal fees are all variable costs as they vary based on the amount of usage or consumption. These costs should have been included in the break-even analysis as part of the variable costs to accurately determine the minimum amount of revenue needed to cover all expenses and break even.

A Recently Graduated Business Student Decided to Open a Small