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April 1, 2015

Homework Help: Accounting: Break even point

Posted by Lola on Tuesday, October 10, 2006 at 10:19pm.

How much profit increase for every unity sold over the break-even point


Break-even point: This is the point in the annual output where the number of units sold, or number of services provided, produces enough gross profit to cover all the fixed overhead costs of operations. For example, a $100 gross profit per unit of output is first applied to the company's monthly burn rate of $100,000. Once 1,000 units have been sold, the company has reached its break-even point, and every unit sold after that point brings in pure profit to the company, as the fixed overhead has already been covered.

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