Break even point

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

10 January 2012 Dear Sir,

Please let me know what is break even point and why this is required to calculate.

What is role of the Fixed amount,variable amount and contribution amount.

Kindly let me know all the concepts which can help me out to get this properly.

CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)
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10 January 2012 Break Even point is the sales point which your cost and revenue is equal. in simple word no profit or loss point.

In the sales after deducting the variable cost balance amount will be required to recover the fixed cost, so the calculation of recovery point called BEP

CMA KNVV Sri Vidya - Sri Kanth

CMA KNVV Sri Vidya - Sri Kanth (Expert)
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10 January 2012 Sales
- Variable cost
= Contribution
- Fixed Cost
= Profit

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Querist : Anonymous

Querist : Anonymous (Querist)

10 January 2012 Dear Sir,

I know this formula and doing calculation of BEP but want to know here that what does mean the variable cost and fixed cost.

How can we define the variation in expenses. How would we define the fixed cost or there are any concepts for this.

Thanks to you!

CMA KNVV Sri Vidya - Sri Kanth

CMA KNVV Sri Vidya - Sri Kanth (Expert)
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10 January 2012 Variable cost is the cost than changes with change in production ..

Fixed Cost is the cost which doesnot change with change in production

Break even point means the place where there is no profit or no loss situation

it means the sales value is equal to the cost incurred for producing the same

CMA KNVV Sri Vidya - Sri Kanth

CMA KNVV Sri Vidya - Sri Kanth (Expert)
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