BEP Under absorption Costing Method

Final 1858 views 2 replies

Hi friends could any one tell.....how to calculate BEP under absorpion Costing method?

Replies (2)

By Definiton, BEP is that level of sales at which operating profits are nil i.e. contribution is equal to Fixed Costs

 

BEP(in units) =  Fixed Cost / Contribution Per Unit

BEP(in Rs.) = (Fixed Cost / Contribution Per Unit) * Selling Price Per Unit 

 

or  Fixed Cost / PV ratio

For BEP under absorption costing we have to consider the full cost i.e. VC + FC and this should cover thru sales

in nutshell, at BEP under absorption, Sales = fc + vc

no of unit = sales/sp


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