Benefits of Applying BEP Analysis

Oct 13, 2025 by magicalceylontours.com 145 views

Analysis of Break Point: Guide Towards Optimal Sales and Profit Plan (Case Study of Caffe Doodle Bar)

Introduction

In the business world, understanding the break-even point (BEP) is crucial for achieving financial stability. The break-even point is the point where the total cost incurred is equal to the total income earned, so the company does not experience losses or profits. BEP analysis provides important information about the amount of sales that must be achieved so that the company does not lose money. This study aims to analyze the application of the BEP concept in the Caffe Doodle Bar, a cafe located on Jalan Harmonika No. 43 Pasar 1, Padang Bulan, Medan.

Background of the Study

The Caffe Doodle Bar is a popular cafe in Medan, known for its unique and delicious coffee blends. As a business, the cafe faces various challenges, including increasing competition, fluctuating market demand, and rising operational costs. To remain competitive and achieve long-term business goals, the cafe needs to optimize its sales and profit planning. BEP analysis can be a valuable tool in achieving this goal.

Methodology

This study used a descriptive research method with a qualitative approach. The analysis was carried out by studying data for 12 months (2016-2017) to determine how the Caffe Doodle Bar applies BEP analysis in sales and profit planning. The data collected included financial statements, sales data, and operational costs.

Results of the Analysis

The results of the analysis show that the fixed cost (fixed cost) of the Caffe Doodle Bar every month is Rp 1,650,000, while the variable cost reaches Rp 12,080,640. The break-even point is achieved in the first month of operational, with a total sales of Rp 7,310,000 or equivalent to 731 units. This shows the margin of safety by 46.8%.

Discussion

The results of the analysis indicate that the Caffe Doodle Bar has a relatively low fixed cost and a high variable cost. This suggests that the cafe has a high degree of flexibility in terms of pricing and operational costs. The break-even point is achieved in the first month of operational, indicating that the cafe has a strong financial foundation.

Benefits of Applying BEP Analysis

Applying BEP analysis in sales and profit planning can have several benefits for the Caffe Doodle Bar. Some of these benefits include:

Help in determining the right selling price. By knowing fixed costs and variables, companies can set competitive and profitable selling prices.

Encourage operational efficiency. BEP analysis helps companies to identify areas that require improvement and efficiency, both in terms of cost and sales.

Facilitating strategic decision making. BEP information can be used to make strategic decisions such as expanding business, adding new products, or opening new branches.

Conclusion

Understanding and applying BEP analysis, Caffe Doodle Bar can increase the effectiveness of sales and profit planning, as well as achieving long-term business goals. By knowing the break-even point, management can determine realistic sales targets to achieve the desired profitability. The benefits of applying BEP analysis include helping in determining the right selling price, encouraging operational efficiency, and facilitating strategic decision making.

Recommendations

Based on the results of the analysis, the following recommendations are made:

The Caffe Doodle Bar should continue to apply BEP analysis in sales and profit planning to ensure financial stability and achieve long-term business goals.
The cafe should focus on improving operational efficiency to reduce costs and increase profitability.
The cafe should consider expanding its business by adding new products or opening new branches to increase revenue and market share.

Limitations of the Study

This study has several limitations, including:

The study only analyzed data for 12 months, which may not be representative of the cafe's financial performance over a longer period.
The study only focused on the Caffe Doodle Bar, and the results may not be generalizable to other businesses.
The study did not consider other factors that may affect the cafe's financial performance, such as market demand and competition.

Future Research Directions

Future research should focus on:

Analyzing the impact of BEP analysis on the financial performance of the Caffe Doodle Bar over a longer period.
Comparing the financial performance of the Caffe Doodle Bar with other businesses in the same industry.
Investigating the impact of other factors, such as market demand and competition, on the cafe's financial performance.

References

[List of references cited in the study]

Appendix

[Appendix containing additional data and information used in the study]
Frequently Asked Questions (FAQs) About Break-Even Point Analysis

Q: What is break-even point (BEP) analysis?

A: Break-even point (BEP) analysis is a financial tool used to determine the point at which a company's total revenue equals its total fixed and variable costs. This point is known as the break-even point.

Q: Why is BEP analysis important?

A: BEP analysis is important because it helps companies determine their sales and profit targets, and make informed decisions about pricing, production, and investment.

Q: How is BEP analysis calculated?

A: BEP analysis is calculated using the following formula:

BEP = Fixed Costs / (Selling Price - Variable Costs per Unit)

Q: What are the benefits of BEP analysis?

A: The benefits of BEP analysis include:

Helping companies determine the right selling price
Encouraging operational efficiency
Facilitating strategic decision making
Reducing the risk of financial losses

Q: What are the limitations of BEP analysis?

A: The limitations of BEP analysis include:

It assumes that sales and costs remain constant
It does not take into account other factors that may affect a company's financial performance, such as market demand and competition
It is based on historical data and may not reflect future trends

Q: How can BEP analysis be used in practice?

A: BEP analysis can be used in practice in a variety of ways, including:

Determining sales and profit targets
Setting pricing strategies
Identifying areas for cost reduction
Making strategic decisions about investment and expansion

Q: What are some common mistakes to avoid when using BEP analysis?

A: Some common mistakes to avoid when using BEP analysis include:

Failing to account for variable costs
Ignoring the impact of market demand and competition
Using outdated or inaccurate data
Failing to consider the impact of changes in sales and costs on the break-even point

Q: How can BEP analysis be used in conjunction with other financial tools?

A: BEP analysis can be used in conjunction with other financial tools, such as:

Cash flow analysis
Return on investment (ROI) analysis
Net present value (NPV) analysis
Sensitivity analysis

Q: What are some real-world examples of BEP analysis in action?

A: Some real-world examples of BEP analysis in action include:

A company that uses BEP analysis to determine the optimal price for a new product
A retailer that uses BEP analysis to determine the break-even point for a new store location
A manufacturer that uses BEP analysis to determine the optimal production level for a new product

Q: How can I learn more about BEP analysis?

A: You can learn more about BEP analysis by:

Reading books and articles on the topic
Taking online courses or attending workshops
Consulting with a financial advisor or accountant
Practicing with sample data and scenarios

Q: What are some common applications of BEP analysis?

A: Some common applications of BEP analysis include:

Retailing
Manufacturing
Service industries
Non-profit organizations
Government agencies

Q: How can I use BEP analysis to improve my business?

A: You can use BEP analysis to improve your business by:

Determining sales and profit targets
Setting pricing strategies
Identifying areas for cost reduction
Making strategic decisions about investment and expansion
Monitoring and adjusting your business plan as needed.