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It's always important to know how much profit a company is making. Many business owners look at the profit margin, which is the amount of money made after sales. However, if you want to know how much a certain product adds to a company's profit, you need to understand the contribution margin at the break-even point. When companies calculate the BEP, they identify the amount of sales required to cover all fixed costs before they can generate a profit. The BEP formula indicates the break-even point in units sold or total sales dollars.
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