In the business world, there is a term called BEP, which stands for break event point. However, every business actor understands the definition of BEP. It turns out that you must also know how to calculate the break even point.
BEP or break event point comprehension
People nowadays prefer to run their own businesses rather than work for someone else or for a company. However, running a business necessitates a significant calculation in order for the business to survive in the face of competition from competitors.
Running a business reveals a situation that is quite unique, namely the BEP or break event point. However, few people understand what a break event point is. Some people believe that the break even point, or BEP, is a situation in which the income exceeds the expenses.
However, when viewed through the lens of the definition, the situation appears to be quite different. So, what exactly is the break event point, or BEP? BEP, or break event point, is a condition in which the income received equals the operational or cost incurred.
How to Determine the BEP or Break Event Point
After you’ve grasped the concept of the BEP, or break event point. Of course, as a business actor, you must also understand how to calculate the correct break even point. So far, the methods used have been divided into three categories.
The marketing method, the unit contribution method, and the graph method are all viable options. So, what is the distinction between the three approaches? Here’s an explanation.
- Marketing Strategy
This method is calculated using the profit and loss statement of the business in question.
- Method of unit contribution
The unit contribution method is then calculated based on the contribution margin amount. Whereas the contribution margin is a state of the difference between the amount of income from sales and variable costs.
- Graphic technique
The graphical method’s third method. The BEP will be described in the form of a graph using this method.
Of course, each of the three methods listed above has advantages and disadvantages. As a business actor, you should be familiar with the fundamentals of the aforementioned method.
BEP components or break event point
You were brought to understand more about the understanding as well as the method or method used to calculate the break even point in the previous explanation. Furthermore, the BEP has a number of supporting components. So, what are the auxiliary components? Here are the BEP’s supporting component points.
- Fixed expenses
- Variable expenses
- Purchase price
Understanding how to calculate the break even point and other critical information. Of course, as a business actor, you can quickly compute BEP or break event points.