What does the general break-even formula account for?

The general break-even formula is primarily concerned with determining the point at which total revenue equals total costs, which means that the business is not making a profit or a loss. This concept is centered around understanding fixed costs, which are expenses that do not change with the level of goods or services produced, alongside total revenue, which is the income generated from sales.

In this context, fixed costs are crucial because they need to be covered for a company to avoid incurring a loss. Total revenue is equally important as it represents the total income coming in from sales. By analyzing both fixed costs and total revenue, businesses can assess how many units they need to sell to cover their costs completely—this is the break-even point.

The other choices present elements that do not directly relate to the break-even analysis in the same way. Preferred dividends and capital gains pertain more to investment returns rather than operational analysis, while variable costs and equity costs deal with costs that change with output and costs of funding rather than the fundamental equation of revenue equating to total costs. Thus, the correct answer accurately embodies the components that the break-even formula needs to focus on.