What is B.E.P? Why an entrepreneur should know about it?

1.	What is B.E.P? Why an entrepreneur should know about it?
Answer» The business to break even when its value is equal to its total cost. The Break Even Point (B.E.P) is the sales volume at which there is neither profit nor loss, cost being equal to revenue. Break Even Point is a neutral point. Sales below this point show loss and sales excess of this point show profit. It is the relationship amongst cost of production, volume of production, profit and the sales value. The entrepreneur should know B.E.P as: 1. He can forecast about profit accurately. 2. He can ascertain costs, sales and profits at different levels of activity. 3. For taking decision regarding price policy.

Answer»

The business to break even when its value is equal to its total cost. The Break Even Point (B.E.P) is the sales volume at which there is neither profit nor loss, cost being equal to revenue. Break Even Point is a neutral point. Sales below this point show loss and sales excess of this point show profit. It is the relationship amongst cost of production, volume of production, profit and the sales value.

The entrepreneur should know B.E.P as:

1. He can forecast about profit accurately.

2. He can ascertain costs, sales and profits at different levels of activity.

3. For taking decision regarding price policy.

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