093 682 682 | 078 868 848 | info@pp-hr.com | Join Discussion | ខ្មែរ | English  | 日本語 | 中文  | ไทย한국어Tiếng Việt

Break Event Point for Service Company

Break Event Point for Service Company

Break Even Point (BEP) is point that make company get zero profit. Zero profit makes revenues equal expense.

BEP is important because managers want to know how many quantities that company must sell to avoid loss.

We usually see Break-even point (BEP) used for calculating products or goods, but we rare see BEP used for service company, but It is practical that we can use BEP for service companies such as school, consulting, audit firm etc.

The following formula is for the Break-even point (BEP).

Profit = Revenue – Expense = Q x SP – TFC – TVC = Q x SP – TFC – Q x VC

Profit = 0, so Revenue = Expense = > Q x SP = TFC + Q x VC => Q ( SP – VC) = TFC

  • Q ( BEP as unit) = TFC/(SP – VC)
  • BEP as dollar = BEP as unit x SP

Which

Q: quantity sold, break even point

SP: selling price per unit

TFC: total fixed cost

TVC : total variable cost

VC: variable cost per unit

Example for school

Assume that ABC school has BBA class, and school fee for BBA is $1,000 per year for a student.

Variable cost for school and teaching is $500 per student. Total fixed costs are $500,000 per year.

Required:

  1. How many students enroll to study that make school neither profit nor loss.
  2. Calculate break-even point (BEP) as dollar.
Solution

1. Number of students

BEP ( No. of students) = 500,000/(1,000-500)=1,000 students

ABC school needs at least 1,000 students to enroll the school or school will lose.

2. BEP ( dollar)

BEP ( dollar) = 1,000 x $1,000=$1,000,000

It is dollar revenue that school should get to avoid loss.


Phnom Penh HR is the best recruitment and consulting in Cambodia and Asia.
Contact: 093 682 682 | 078 868 848 | info@pp-hr.com | www.pp-hr.com

 

Find Jobs Here !

Featured Jobs

Responsibilities Responsible for all underwriting matters related to acceptance of risks/policies and ensures that it is in compliance with the company’s business strategies and risk acceptance guidelines. Conducts review on new and renewal cases. Ensures that issuance of policy documentation is within the timeframe set. Handles enquiries from customers, agents, brokers, reinsurers and internal customers. Provides technical underwriting support to
Responsibilities Sells and markets a wide range of general insurance products and services to meet set targets.  Requirements A recognised University Degree preferably related to Finance and Marketing; Experience in the sales of insurance or financial products will be an advantage; Outgoing with excellent interpersonal and communication skills. Ability to converse in Chinese will be an added advantage. Committed, highly
Loading...