Case10-5

Classifying costs

1.With a group of students, visit a local copy and graphics shop or a take-out pizza restaurant. As you observe the operation, consider the costs associated with running the business. As a group, identify as many costs as you can and classify them according to the following table headings:

CostDirect MaterialsDirect LaborOverheadSelling Expenses

Case11-6

Break-even analysis (your local pizza shop)

1.Break-even analysis is one of the most fundamental tools for managing any kind of business unit. Consider the management of a pizza shop. In a group, brainstorm some applications of break-even analysis at your local pizza shop. Identify three areas where break-even analysis might be used. For each area, identify the revenues, variable costs, and fixed costs that would be used in the calculation.