Determination of the cost of patchouli oil production in South Aceh using break-even analysis

Abstract

This paper uses break-even analysis to determine the cost of producing patchouli oil in Kete Nilam Hijo (KNH). KNH is an industry engaged in the refining process of patchouli oil, located in South Aceh Regency, Indonesia. One obstacle faced by the KNH is that the costs of producing patchouli oil are not yet known. So far, KNH has never made economic calculations in producing patchouli oil. KNH only relies on production based on profit so that profits are not maximized and always fluctuates. In addition, the break-even point for the production of patchouli oil is also not known with certainty. To determine the break-even point, total costs and total revenue will be calculated first. This research was conducted in several stages, namely preliminary study, data collection, data processing, analysis of results, and finally concluding the results of the study. The results showed that the total production cost of patchouli oil refining at KNH in one year was 1,120,018,250 rupiah. Meanwhile, KNH had to sell 1,600 kilograms of patchouli oil to break-even.