Understanding, definition and formula for BEP / Break Even Point – The Economics of Development Studies
Break Even point or BEP is an analysis to determine and find the amount of goods or services to be sold to consumers at a certain price to cover costs incurred as well as benefit / profit.
Break Even Analysis formula:
BEP = Total Fixed Cost / (Price per unit – Variable Cost per unit)
Description:
- Fixed cost: A fixed fee whose value tends to be stable without being affected units produced.
- Variable cost: cost of a large variable value depends on benyak little amount of goods produced yng.
example:
For instance there are companies convection socks cheap price of a single sock is Rp. 10,000 with a variable fee of Rp. 5,000 per socks and face costs of Rp. 10,000,000
BEP = 10,000,000 / (10,000 – 5,000)
BEP = 20,000
So producing 20,000 socks need to obtain a balanced condition between the cost with the benefit of zero profit alias.