Break even is when you try to achieve a goal, when your costs is the same and equal to your profit. To get your break even point, you can either draw a graph which includes your time period and your costs, or you have use a formula, which is fixed costs, divided b the sales revenue and the total cost. to do this you have to take away the sales revenue and the total cost.
Fixed cost is a cost which never changes, it would stay the same for the time period for example each month, week or year. these costs are already decided on how much you need.
Variable cost include things like raw materials, energy bills, labour devices and distribution costs. These costs can change depending on how much you need and use.
Total cost is all the costs you have together for example the fixed cost, the sales revenue and the variable cost. You add up all the costs and this would give you the total costs.
Total cost= variable cost+ sales revenue+ fixed cost
The sales Revenue is the money coming in to the business, by the products you sell in the business.
What affects the BEP?
The BEP is affected by the variable costs if it changes massively and the sales revenue, if the products don't sell that good, if the products don't sell than expected then it would change the figures on the chart. Also if the product price is less then you have to sell more however if the product price is high you are expected to sell less.
Why is BE important?
Break even is important because it gives the business a goal to achieve, it they do it increases their productivity, and their aim also increases.
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