This article provides a full proof formula to calculate break even point. BEP can be calculated in a number of ways, depending on the nature of the information available. Let us use the following symbols in our calculation: P: Selling price per unit q: sales volume f: fixed cost me v: per unit variable cost. Now for BEP, Sales = [...]
There are following two methods to obtain break-even point: 1. Mathematical Method 2. Graphical Method. 1. Mathematical Method: Let cost be the common variable in two situations 1 and 2, then cost equations will be; C1 = f1(x)... a function of (x) ...(1) C2 = f2(x)... another function of (x) ...(2) C1 – may be as total cost, annual cost, [...]
The break-even point means the level of output or sales at which no profit or loss is achieved. It indicates the position at which marginal profit or contribution is just sufficient to cover fixed overheads. In other words, a business is said to break-even when its income equals its expenditure. When production exceeds the "Break-even point", the business makes a [...]