Question

How to Calculate BEP and Apply It to Your Business

i need you to write 150 words for this quastion

Answer 1

Break Even Point is the scale of business which offer just about enough contribution to cover the expenses of fixed cost of the business.

For example, if an organisation produces a product which costs $50 to produce, and sells for $70. The fixed cost of production is $160000. Here, the numbers required to be produced to cover this cost will be termed as BEP of that business

Such as

Contribution per unit x No. of units produced = 160000

(70-50) xn = 160000

which gives n= 8000

This means that break even point for this business is 8000 units, above which it will be just profitable.

BEP is crucial for the business as it determines the scale of operation needed to just cover the costs, and helps to plan the targets.