Accounting: Break even point
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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The profit increase for every unit sold over the break-even point will depend on the gross profit margin associated with each unit. This is the difference between the price at which a unit is sold and the cost of producing it; the higher the gross profit margin, the greater the profit increase per unit sold. For example, if a business has a gross profit margin of $50 per unit of output, then every unit sold over the break-even point could bring in $50 in additional profit.
