Jason Decided to Open a Small Internet Café Serving a Variety

Multiple Choice

Jason decided to open a small Internet café serving a variety of unusual nonalcoholic beverages from around the world. He set a goal to break-even within the first six months and make a moderate profit thereafter. Within a week of opening, every seat was filled and he had to replenish inventory several times. At his six-month review, he was devastated to find that despite huge sales, he had actually lost money. His math was not wrong, but he had failed to include monthly expenses such as toilet paper, paper towels, and hand soap 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) sunk costs