Break Even Point(BEP)

 Break Even Point(BEP)

Break even point is the level of activity or sales volume at which the total revenue is equal to the total expenses. At the break even point ,a business man neither earns any profit nor incurs any loss. Break even point also called ”No profit, no loss point” or “Zero loss point”.

Calculation of Break even point in units

B.E.P =           Fixed Cost
                                 ___________
                           Contribution per unit

Break Even Point in Sales Value

B.E.P =  

Fixed Cost                   ___________              Contribution per unit

x Sales

                          OR

                       

B.E.P=

Fixed Cost ___________ P/V Ratio

 B.E.P= Actual Sales-Margin of Safety

Break Even Ratio

 Break even ratio is the percentage of break even sales to actual sales

 

Break Even Ratio

Break even sales _________________ x 100 Actual Sales