What is the minimum number of units that need to be produced to make sure that there was no loss?
Answer: B
Profit = Revenue – Variable Cost – Fixed Cost = Revenue – (Variable Cost + Fixed Cost). If we consider (Fixed Cost + Variable cost) as total cost, then as long as the revenue is higher than the total cost, there is a profit. In case the revenue is less than the total cost there would be a loss. If we are to compile the data given in the question it would be as follows:
Thus, we can say that at a production of 12 units, there is a profit of Rs. 2. Above 12 units there is always a profit and below 12 units there is loss. Hence, to make sure there is no loss, one has to manufacture a minimum of 12 units.
* The answer is clearly not indeterminable, it should be 12 units, but among the options given the one closest to it is 10 units