{"id":31699,"date":"2017-05-15T13:08:10","date_gmt":"2017-05-15T05:08:10","guid":{"rendered":"https:\/\/zahiraccounting.com\/en-my\/?p=31699"},"modified":"2017-05-15T13:08:10","modified_gmt":"2017-05-15T05:08:10","slug":"calculating-break-even-point","status":"publish","type":"post","link":"https:\/\/zahiraccounting.com\/en-my\/31699-calculating-break-even-point.html","title":{"rendered":"Calculating Your Break-Even Point"},"content":{"rendered":"

\"Calculating<\/a><\/p>\n

One of the key financial analysis tools used by business owners is calculating break-even point (BEP). It is necessary to find out your break-even point in order to gain business profit, decide the price, set sales budget, and business plan. It also a useful tool to analyze sales volume average production cost and average sales price.<\/p>\n

Break-even point is the point that total revenue equals to total expenses. To calculate the company\u2019s break-even point, first find out the fixed and variable cost for the produced items. Calculating break-even point will help the owners to decide how many units to sell at the price point to break even. For example, to calculate break-even point in sales volume, there are three variables needed:<\/p>\n

    \n
  1. Fixed cost. An independent cost of sales volume, for example, wages<\/li>\n
  2. Variable cost. A dependent cost on sales volume, such as cost of manufacturing product<\/li>\n
  3. Product selling price<\/li>\n<\/ol>\n

    There are two types of formula to calculate Break-Even Point:<\/p>\n

      \n
    1. Unit . To calculate the unit produced to have break even: BEP = FC \/(P-VC)<\/li>\n
    2. Sales. To calculate the sales revenue to have break even:<\/li>\n<\/ol>\n

      FC\/ (1 \u2013 (VC\/P))* Calculation (1 \u2013 (VC\/P)) generally known as Margin contribution per unit<\/p>\n

      \u00a0An example of finding the break-even point<\/h3>\n

      Total Fixed cost (FC) IDR. 100.000.000<\/p>\n

      Total Variable cost (VC) per unit IDR .60.000<\/p>\n

      Selling price per unit IDR 80.000<\/p>\n

      BEP Unit calculation<\/b><\/p>\n

      BEP = FC\/ (P \u2013 VC)<\/p>\n

      BEP = 100.000.000\/ (80.000 \u2013 60.000)<\/p>\n

      BEP = 5000<\/p>\n

      BEP IDR calculation<\/b><\/p>\n

      BEP = FC\/ (1 \u2013 (VC\/P))<\/p>\n

      BEP = 100.000.000\/ (1 \u2013 (60.000\/80.000))<\/p>\n

      BEP = IDR. 400.000.000<\/p>\n

      This analysis helps the business to forecast its profit based on its minimum sales. To calculate the target profit use this following formula:<\/p>\n

      BEP \u2013 Profit = (FC + Profit Target) \/ (P \u2013 VC)<\/p>\n

      With the same FC, VC, and P in the previous example, the company target profit is IDR. 80.000.000 monthly.<\/p>\n

      BEP \u2013 Profit = (FC + Profit Target) \/ (P \u2013 VC)<\/p>\n

      BEP \u2013 Profit = (100.000.000 + 80.000.000) \/ (80.000 \u2013 60.000)<\/p>\n

      BEP \u2013 Profit = 180.000.000 \/ 20.000<\/p>\n

      BEP \u2013 Profit = 9.000 units or<\/p>\n

      BEP \u2013 Profit = IDR. 720.000.000<\/b> (9000 units x IDR 80.000)<\/p>\n

      To ensure that selling 9.000 units is worth IDR. 720.000.000, the gained profit is IDR. 80.000.000:<\/p>\n

      Sales \u00a0IDR. \u00a0720.000.000<\/p>\n

      FC \u00a0\u00a0\u00a0IDR \u00a0100.000.000<\/p>\n

      Total VC (IDR 60.000 x 9000 units) IDR 540.000.000<\/p>\n

      Total cost IDR. \u00a0640.000.000<\/p>\n

      Profit \u00a0IDR. 80.000.000 (<\/b> Sales \u2013 (FC + Total VC))<\/b><\/p>\n

      BEP is the most important feature in accounting software and business management. As the business owner, BEP allows you to decide your pricing product, cost incur in business, and sales volume.<\/p>\n","protected":false},"excerpt":{"rendered":"

      One of the key financial analysis tools used by business owners is calculating break-even point (BEP). It is necessary to […]<\/p>\n","protected":false},"author":11,"featured_media":31737,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[9],"tags":[],"yoast_head":"\nCalculating Your Break-Even Point - Best Accounting Software in Malaysia | Zahir<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/zahiraccounting.com\/en-my\/31699-calculating-break-even-point.html\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Calculating Your Break-Even Point - Best Accounting Software in Malaysia | Zahir\" \/>\n<meta property=\"og:description\" content=\"One of the key financial analysis tools used by business owners is calculating break-even point (BEP). 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