Break Even Point Is: Control, Benefits And Formulas Of Calculation

Illustration of calculating BEP (Photo: Pixabay/geralt).

YOGYAKARTA Break-even points are break-even points, or a condition where a business does not make a profit, but also does not suffer losses. Break-even points (BEP) is very important because it can help management reach a balance point between cost and revenue in a business.

Well, in this article VOI has summarized a number of information about what the break event points, benefits and calculation formulas are. For those of you who are curious, let's look at the full information below.

Break Even Point is a condition where the amount of profit earned is the same as that needed in a business or it can be said that there is no loss.

Under these conditions, the profit earned by the company is 0 (zero), which means no profit or loss. The lay term is return of capital.

According to the Bankrate, the BEP is defined as a break-even point that leads to the amount of income that must be required to cover the total costs that have been incurred within a certain period of time, both fixed costs and variable costs.

According to Mulyadi, break-even points are defined as a condition where businesses do not earn profits, but also do not suffer losses. This means that the business is said to be even if the amount of income is equal to the amount of cost. Or if the contribution profit is used to cover costs only.

A company can be in a BEP situation if it uses fixed costs in its operations, while the sales volume is only sufficient to cover fixed costs along with existing variable fees.

At this point, the company's profit and loss will be in point position 0 (zero) and if the company's revenue is greater than fixed costs and variable costs, the company will be declared profitable.

That way, your company's profits will be in point 0 (zero) position and if the income your company generates is greater than fixed costs and variable costs, then your company is declared profitable.

Break event point calculations can bring many benefits to business people, including:

At least, there are four components that need to be included in order to calculate or search for BEPs, including:

The BEP calculation aims to find an inequality between costs incurred for production and income obtained in one period.

The BEP can be calculated in two ways, namely the unit BEP and the nominal BEP. The formula for calculating the BEP is as follows:

That's information about break-even points or break-even points. Break-even points are a condition where companies don't make a profit or don't lose. Hopefully this article can add insight to the loyal readers of VOI.ID.