Presentation by To

Ankita Manger Dr. Kamal Joshi Sir

202201001002 On the topic BEP Analysis
BBA 3rd Semester
Management Accounting

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 Introduction
 Break-even analysis determines the production level at which total
revenues equal total expenses.
 It helps in pricing decisions, sales forecasting, cost management, and
growth strategies.
 By understanding the cost structure, businesses can set prices that cover
fixed and variable costs.
 It assists in decision-making by providing a clear perspective on the
financial aspects of a business.
 Break-even analysis is used to calculate the minimum level of sales or
revenue required to cover costs.
 It is essential for businesses to make informed decisions about pricing
strategies and to understand the short- and long-term implications of their
pricing decisions

Total cost Total revenue = B.E.P

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 Components of BEP Analysis

Fixed Costs: Costs that remain constant regardless of the level of production.

Variable Costs: Costs that vary with the level of production.

Selling Price: The price at which a unit of product or service is sold.

Visual: Diagram showcasing the components with examples.

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 The formula for break-even analysis is as follows

Break-Even point = Fixed Costs / (Sales Price per Unit – Variable Cost Per
Unit)
Where
Fixed Costs are costs that do not change with varying output (e.g., salary, rent,
building machinery
Sales Price per Unit is the selling price per unit
Variable Cost per Unit is the variable cost incurred to create a unit

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 Conclusion

BEP analysis is crucial for financial planning and decision-making in businesses

Break-even analysis helps businesses understand the minimum sales required to
cover costs and make a profit, enabling informed decisions about pricing
strategies, sales forecasting, cost management, and growth strategies.

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