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The break-even point is where the costs of doing business and the sales made are equal and "a company neither earns a profit nor incurs a loss" (Wild, 2019). This is the point at which all additional sales become profit and the previous sales have covered all debits as they relate to this product. The break-even formula is Break-even point in units=fixed costs/contribution margin per unit. The answer to the previous formula shows at exactly which point the company will reach profitability. The contribution margin is also known as the dollar contribution per unit. It is calculated as the selling price of the product minus the variable cost of the unit. This shows us the amount made off each product after the variable costs have been deducted. Since the break-even point formula is equal to fixed costs/contribution margin per unit (selling price-variable costs) the break-even point formula takes all costs related to a product and shows how many units of said product are required to sell in order to offset the cost of production. If a product is popular and sells many units it is likely to stay in production, as compared to a less popular unit that barely hits its break-even point.