answersLogoWhite

0

What is a BEP?

User Avatar

Bobo192

Lvl 1
9y ago
Updated: 4/28/2022

A BEP is a break-even point, the point at which total costs equal total revenue and the organization neither makes a profit or a loss.

User Avatar

Wiki User

9y ago

What else can I help you with?

Continue Learning about Accounting

What is the formula of marginal costing?

sale-variable cost=(contribution)-fixed cost =(profit):this is the statement of marginal cost. (profit volume ratio)p/v ratio=contribution÷sales x 100 mos(margin of safety)=actual sales-break even point(BEP)sales. mos(margin of safety)units=actual sales(units)-break even point(BEP)sales.(units) BEP(rs)=fixed cost ÷ pv ratio BEP(units)=fixed cost ÷ contribution per units required sales(rs)=fixed cost+desired profit ÷ pv ratio required sales(units)=fixed cost+desired profit ÷ contribution per unit . ( there is different formula for..when 2yr profit & sales are given) (


What are the disadvantages of Break Even point?

The Break Even Point (BEP) analysis has several disadvantages. Firstly, it assumes that costs and revenues are linear, which may not reflect real-world complexities such as variable costs or changing market conditions. Additionally, BEP does not account for the time value of money or the impact of fixed costs that can fluctuate over time. Lastly, it may oversimplify decision-making by focusing solely on profit and loss without considering other critical factors like market demand and competition.


How does break even analysis work?

Break-even analysis is a financial assessment that determines the point at which total revenues equal total costs, indicating no profit or loss. It involves calculating fixed and variable costs, with the break-even point (BEP) expressed in units or sales revenue. The formula for BEP in units is fixed costs divided by the selling price per unit minus variable cost per unit. This analysis helps businesses set sales targets, assess profitability, and make informed pricing and production decisions.