When analyzing a business, it is important to frequently use the Break Even Point (BEP) calculation so that the company itself in the future can make good decisions.

According to experts, many people still need to understand what BEP is, how to calculate BEP and the BEP formula. This time there will be an explanation regarding the Break Even Point which can also help you with various needs, especially for calculating costs at the company.

## Definition of Break Even Point (BEP)

BEP is the main factor determining where the income is equal to the capital provided so that the company does not experience losses or profits. Currently, the total loss is only 0, which means that the company or business does not share any loss or gain from the industry it runs.

Sometimes, some people who need help understanding what BEP is may need clarification about the importance of the Break Even Point in a business or business trip; players from the world of the stock market widely use even this BEP.

Often, calculations used in the stock market use the BEP method when they want to buy and sell a stock, so they know precisely when to call or buy and when to put or sell. Currently, many tools can simplify BEP calculations, so there is no need to bother calculating with existing methods.

## Basic Components of BEP

Before discussing how to calculate BEP, it is important to understand the basic components contained in BEP calculations, namely:

- Fixed costs, or total costs, will not change even if the output volume changes.
- Variable costs are flexible and can change depending on changes in the production volume itself.
- Revenue is how much money the seller of the product will earn.
- Profit is the amount of money remaining after deducting fixed and variable costs and revenue.

## How to Calculate BEP and the Break-Even Point (BEP) Formula

After you know the essential components of BEP, this time, we will show you how to calculate BEP using the following BEP formula:

**BEP = Fixed cost : (Selling price per unit – variable cost per unit)**

The contribution margin formula is the difference between the reduction in the selling price per unit and the variable cost per unit.

**BEP = Fixed Cost : Contribution margin per unit**

If required in Rupiah, then use the BEP formula in units/units multiplied by the price so that:

**BEP in currency = selling price per unit x BEP per unit**

The contribution margin can determine the profit value of products sold by measuring the impact of sales on profits. The contribution margin formula is as follows:

**Contribution margin = Total sales – Variable costs**

When calculating the contribution margin, paying attention to the variable costs charged in total expenses and sales is essential.

Using the contribution margin, a company can separate its production costs from its profits. And in this way, too, the company knows the product’s price to be sold.

## Example of how to calculate the Break Even Point (BEP)

To get a deeper understanding of how to calculate BEP, it is also essential to know examples of BEP questions to clarify them. So, examples of BEP questions can help make BEP calculations more accurate and straightforward.

### A simple example of calculating Break Even Point

For example, an accounting manager is responsible for production and inventory management. He wants to know the sales price needed to pay labour/operational costs of 50 million rupiahs, and the profit he wants to get is 20 million rupiahs.

Fixed price: 50,000,000

Unit replacement cost: 30,000

Selling price per unit: 50,000

Required value: 20,000,000

Here’s how to calculate or find the Break Even Point (BEP) for this example problem:

**BEP = Fixed Cost : Contribution margin per unit**

= 50,000,000 : (50,000 – 30,000)

= 50,000,000 : 20,000

= **2,500 Units**

This means the Company must sell 2,500 units to break even and not profit.

Another critical factor for the accounting manager in charge of production is calculating the total amount in rupiah or another currency.

**BEP in Rupiah = selling price per unit x BEP per unit**

= 50,000 x 2,500 units

= **Rp. 125,000,000**

In addition, one of the critical factors in calculating the breakeven value analysis (BEP) is how it is applied to produce the desired unit value.

**Units = (Desired profit : Contribution margin) + BEP units**

= (20,000,000 : 20,000) + 2,500

= 1,000 +2,500

= **3,500 units**

Thus, a production manager can determine how many units must be sold to achieve the desired profit.

In this case, the Company has to sell 3,500 units to make a profit of IDR 20,000,000.

Of course, understanding and knowing how to calculate BEP cannot be done quickly, as it takes a lot of practice to do it right.

But as explained above, we hope to help you by clarifying the main points so you can use BEP to trade or do business.

This explains how to determine the breakeven point (BEP) to evaluate how a business can run smoothly and efficiently so that all decisions are made correctly.