Analysis of SMES’ Understanding to Apply an Accounting Tool: Break-Even Point

Abstract

Small-Micro Enterprises (SMEs) have been hardest hit and affected by an economic crisis with a large and significant contribution of SMEs to the number of business units, gross domestic product, etc. This condition requires SMEs to consider applying a meaningful accounting tool within the company strategy. This study aimed to investigate how well SMEs can use the accounting tool "BEP analysis". Fixed cost, variable cost, and sales become the target of measurement on the understanding of SMEs to perform BEP analysis in this study. Data collection was carried out by the author by first conducting interviews with key informants from ten SMEs in the city of Tobelo, North Maluku as the sample in this study. The author analyzed the answers given by each key informant regarding the target variables and how the business owner record their operational activities. The result shows that the majority of SMEs keep detailed records of their cost, volumes, and profits or losses. And, the majority of SMEs have a clear understanding of fixed costs, variable costs, as well as sales. As such, the author concludes that the majority of SMEs have the potential to conduct BEP analysis. Especially for SMEs that have met criteria such as keeping appropriate and consistent records and having a good comprehension of the variables used in BEP analysis.