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Module 4: Cost-Volume-Profit Analysis (CVP/BEP)

CVP/Break Even Point Meaning

• Break even point represents that volume of

production or amount of sales that in results into
a no-profit no-loss situation.

• If output quantity (volume) or output sale falls
below that breakeven point there is loss; and if

output exceeds that point there is profit.

• Thus, it is the minimum point of production/sale

where the total cost are recovered.

CVP/Break Even Point (Units) Case 1:

Assume that as an investor, you are planning to enter the
construction industry as a panel formwork supplier. The

potential number of forthcoming projects, you forecasted that
within two years, your fixed cost for producing formworks
is Php 300,000. The variable unit cost per unit of making
one panel is Php 15.00. The sale price for each panel will be
Php 25.00. If you charge Php 25.00 for each panel, how many
panels you need to sell, in order to start making profit?