4. Breakeven Point The point at which the firm absorbs fixed costs (overhead) and profit is zero. If sales increase beyond the BEP, the firm becomes profitable. The difference between price and variable cost is the contribution margin that absorbs the fixed costs. BEP =FC (fixed costs) /P (price) VC (variable cost) This company has fixed costs of $2,000,000; sells it product for $10.00 per unit; with variable costs of $6.00 ( 40% contribution margin). How many units and how much sales does the company need to generate in order to break even