Hi friends could any one tell.....how to calculate BEP under absorpion Costing method?
Hi friends could any one tell.....how to calculate BEP under absorpion Costing method?
By Definiton, BEP is that level of sales at which operating profits are nil i.e. contribution is equal to Fixed Costs
BEP(in units) = Fixed Cost / Contribution Per Unit
BEP(in Rs.) = (Fixed Cost / Contribution Per Unit) * Selling Price Per Unit
or Fixed Cost / PV ratio
For BEP under absorption costing we have to consider the full cost i.e. VC + FC and this should cover thru sales
in nutshell, at BEP under absorption, Sales = fc + vc
no of unit = sales/sp
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