Breakeven point (BEP)

Learn how to calculate break even point using contribution margin, the income statement approach and the contribution margin ratio. For more help with accounting, please visit my website AccountingInFoc....

[@OkiDingo]

lol, love the start "it's time for another EXCITING managerial accounting video".

[@allkristiningram]

I need to do something to entertain all of you and myself :)

[@OkiDingo]

@@allkristiningram yep, btw I really appreciate these videos they have really helped in my accounting II class.

[@sumayasuzu4781]

Thanks Allah for great lecturers

[@allkristiningram]

+Nouradein Abdirahman thank you!

[@daltonw12345]

Im confused. 3.75 X 10,500 = 39,375 not 30,000. Can you clear this up for me?

[@allkristiningram]

10,500 is the actual number of units sold. BEP is 8,000 units. That means that the company is generating a profit. We know this because the company is selling 2,500 more units than the break even point. You could go one step further and say that because the company is selling 2,500 units above break even point, the profit of the company is $9,375. Once the company hits the break even point, every additional unit generates $3.75 of additional contribution margin. Since the fixed costs are covered, all of this additional contribution margin is profit.

[@daltonw12345]

Kristin Ingram Where does 30,000 come from?

[@allkristiningram]

At break even point, contribution margin equals fixed cost.