Break-even analysis is a modeling technique to determine the number of units to sell or produce that will result in zero profit.\ \ Types of Costs\ Fixed costs, cf , are independent of volume and remain constant. This is an example of a parameter, a known and constant value.\ Variable costs, cv , depend on the number of items produced. This is an example of a variable, the part of the model that can take on many different values. \ How would we set up a model for total cost?\ \ \ \ What would be the formula for total revenue? \ \ \ \ What would be the formula for total profit?\ \ \ \ How do we find the break-even point?\ \ \ \ \ \ \ Example (from #22 in the book): Annie Russell, a student at Tech, plans to open a hot dog stand inside Techs football stadium during home games. There are seven home games scheduled for the upcoming season. She must pay the Tech athletic department a vendors fee of $3,000 for the season. Her stand and other equipment will cost her $4,500 for the season. She estimates that each hot dog she sells will cost her $0.35.\ \ 1. What are her fixed costs? \ \ 2. What is her variable cost? \ \ 3. What should she have included in that variable cost? \ \ \ 4. If she sells hotdogs for $1 each, how many will she need to sell to break even?