After the break-even point is reached, the entire contribution margin on the next units sold will be profit…provided the total fixed costs and expenses do not increase.

The reason lies in the definition of contribution margin: selling price minus the variable costs and expenses. Once the contribution margins have covered the total amount of fixed costs and expenses, the entire contribution margin on the next units will go to profit.

Learn more about Break-even Point.

About the Author: Harold Averkamp (CPA) has worked as an accountant, consultant, and university accounting instructor for more than 25 years.

He is the creator of the AccountingCoach Pro which has been praised for its ability to simplify accounting in a way that anybody can understand.

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