During the period until that point is reached, the deficit in respect of the cumulative proceeds will be capitalized for later amortization. At point B the initial deficit on the accumulated costs has been recovered and the cash flow is available for profit. Points A and B are therefore crucial for measuring the success of an aircraft programme. They are reached after a certain number of aircraft have been sold. In the programme method of accounting start-up costs are spread out across the number of aircraft that are expected to be produced as a series during the life of the programme, based on a conservative market projection.
Prudence requires that the number is set as a percentage of projected sales.
This number can be referred to as the calculation number or break-even number. How long it will be before the BEP is reached depends of course on the number of aircraft produced per year. The production rate therefore affects the length of time before the BEP is reached. Each aircraft produced bears a proportionate share of the start-up costs. The start-up costs are capitalized and equalized through amortization on the number of aircraft delivered.