Bep mba

Hello sir I want to know about the break-even point topic of MBA so please provide me information about this topic in detail.

[Shaleen]

The break-even point for a product is the point where total revenue received equals the total costs associated with the sale of the product (TR=TC).

About the BEP

A break-even point is typically calculated in order for business to determine.

Break-Even Analysis can also be used to analyze the potential profitability of an expenditure in a sales-based business.

Break-even point (for output) = fixed cost/ contribution per unit

Contribution (p.u) = Selling price (p.u) – Variable cost (p.u)

Break-even point (for sales) = fixed cost/ contribution (pu) *sp (pu)

Formula for BEP

BEP = Fixed Costs/(Selling Price – Variable Costs)

Fixed Costs

These are the costs that do not change with the quantity produced and remains constant.

Examples can be the rent, property tax, insurance, etc.

Variable Costs

These costs depend on the quantity produced and vary with the production levels. They increase with the increase in production volumes.

Examples are labor cost, material cost, etc.

Total Cost = Fixed Cost + Variable Cost

Break-Even Analysis Topics:

BREAK-EVEN ANALYSIS DEFINITION

MARGIN OF SAFETY

IN CAPITAL BUDGETING

PROFIT, COST AND QUANTITY ANALYSIS

Break Even Chart

It is a graphical representation of costs at different levels as shown below-