Break-Even Point Analysis

1. Business revenues are equal to its fixed costs.
2. Business revenues are equal to total costs, including both fixed and variable costs.
3. Business revenues are equal projected revenues.
4. Business revenues are equal to its variable costs.

2. In order to manage costs effectively (and to calculate the break-even point), a business owner or manager needs to be able to distinguish between fixed and variable costs. Which of the following statements accurately illustrates a fixed or variable cost?

1. A bakery would consider the cost of flour, yeast, sugar, and other ingredients a variable cost.
2. The monthly lease payment on a business' delivery vehicle is a variable cost.
3. An online business that ships all of the product it sells would consider mailing boxes and envelopes a fixed cost.
4. For a business like In-N-Out Burger, the cost of potatoes used to make french fries is a fixed cost.

1. fixed costs divided by the contribution margin per unit.
   
2. revenues minus expenses.
   
3. revenues minus total costs divided by quantity.
   
4. fixed costs divided by variable costs.