--%>

Introduction of the term Break Even Point

Give a brief introduction of the term Break Even Point. How does BEP aid in making business decision?

E

Expert

Verified

Break Even Point (or BEP) is a quantity of sales where there is neither profit nor loss. Which means contribution is sufficient to cover the fixed costs.

Therefore, we can say that Contribution = Fixed Cost

Any contribution generated after BEP will straight result in profits as the fixed costs are completely covered now. BEP can be evaluated in two ways:

In phrases of Quantity-

Fixed Costs / Contribution per unit

In phrases of Amount-

(Fixed Costs) / (P/V Ratio)

   Related Questions in Managerial Economics

  • Q : Difference between economics and

    What is the difference between economics and managerial Economic?

  • Q : Technological advances in starting of

    Technological advances because the starting of the twentieth century has: (w) removed the limits on our ability to produce. (x) removed the problem of scarcity. (y) expanded our capability to produce. (z) raised the use of resources for production.

    Q : Pay the lowest wages in market

    Occupations along with the highest percentage of women workers tend to: (1) pay the highest wages. (2) need relatively more human capital and experience. (3) pay the lowest wages. (4) require very small human capital or experience.

  • Q : Income Effects and Substitution Effects

    When the substitution effect of a higher wage rate is more powerful than the income effect, in that case the: (1) supply curve of labor will be positively sloped. (2) demand for leisure increases as income rises. (3) human capital eff

  • Q : Evan J Douglass definition of

    What is the Evan J Douglas’s definition of Managerial economics?

  • Q : Total Labor Income by Elasticity of

    When the demand for labor is wage elastic, raises in wage rates cause total labor income to: (w) increase. (x) decrease. (y) remain the same. (z) fluctuate erratically. I need a go

  • Q : Illustrates the real concept briefly

    Illustrates the real concept briefly?

  • Q : Examples of Economic Capital

    Landscaping a garbage dump along with topsoil, grass and trees to construct a golf course is an illustration of creating new: (i) capital. (ii) land. (iii) employment. (iv) economic profits. (v) natural resources. Please guys help

  • Q : Legal incidence of tax burdens The firm

    The firm or individual responsible for paying a specified tax to the government bears: (w) stigma of being a tax evader when it is completely forward shifted. (x) full tax burden only when the tax is backward shifted. (y) legal incidence of the tax. (z) reduction in p

  • Q : Explain about the signaling Signaling :

    Signaling: (w) attempts to finesse adverse selection. (x) involves behavior by agents to communicate special qualifications which will elicit the offer of a contract from a principal. (y) refers to potential employees obtaining skills, education or ex