Tuesday 18 April 2017

Break Even : Break Even Point (BEP)

Break Even

The sense of the Break Even Point is a point of analysis that shows a balance between the amount of costs incurred and the amount of revenue generated from the sale proceeds.

In connection with it, to better know about the sense of cost, below will be addressed extensively discussed about the determination of the cost of goods, expressed that in broad sense break point is the sacrifice aven resources economically, which profit from a period of work or of a certain business activities, the company does not earn a profit but also did not suffer losses and get no benefit.

Introduction to break even point (BEP)

In the production process has indeed produced a number of costs to produce goods and services. So companies usually calculate before running the activity whether the company can be profitable or not, in the theory of the point of principal (Break Even Point) in a company that is not experiencing losses and profit (Breakeven) .

Companies that suffered such things certainly think things about self-development of excess, how in the future the staple home point Analysis is an analysis that shows the point of balance between the number of costs incurred and the amount of revenue generated from the sale proceeds.

It can also be said this analysis shows a situation where the company experienced no gains and also suffered no losses. An enterprise is said to break even point in having made the calculation of loss of profit from a period of work or of a certain business activities, the company do not gain profit but also not benefit.

Advantages of Break even point

From the notion expressed by Suhardi Sigit above it can be said that the amount of costs incurred equal to the amount of sale proceeds obtained can only be covered all costs incurred (losses of profit does not occur). From the analysis of the principal home (break even) we can know or can provide an explanation of how the amount of the goods must be produced or how much stuff should be sold within a certain period in which the company does not suffer any loss and not getting the advantage.

In addition to the terms that are in the analysis of the break even point is also often used the term cost volume profit. This analysis demonstrates the relationship between costs incurred by production volume and the magnitude of the earnings/profits. If on a given volume, there is as great as the sales acquisition costs incurred, then at this point the so-called breakeven.

The determination of the charge or allocation expressed that an investigation into the relationship between the cost, the profit volume is very important for management to be able to make a a good plan. Further investigation of this we can get something good cost classification for the purpose of production management, planning and strategy to be able to increase profits.

The definition presented above can be drawn conclusion that by holding an investigation into the relationship between costs, volume and cost of it will be very useful because in this case management such investigation will provide information in good planning for smooth effort in delivering the desired goals.

Disadvantages of Break even point

Although there are a variety of uses in the home, but staple analysis there are also some disadvantages. Planning to prepare a break even requires a lot of estimates and assumptions that can lead to lack of speed results presented by the chart. Some of the limitations of the system's principal, as follows:
  1. The overall Lines, i.e. lines that describe the amount of fixed costs and variable costs, it should not be portrayed as a straight line therefore in reality the cost usually does not change are proportional.
  2. System break even shows a static picture, are the operations of the company is very dynamic, therefore changes each time can occur.
  3. Classification of cost semi semi fixed variable and often ignored, then put it in the variable costs or fixed costs.
  4. When the company produces various types of production then another problem occurred in addition to the problems described above for example product mix tends to be a different charge, so that each company's product mix will be likely to change the fact that there are in the chart break even. 

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