Consider the following figures marked A and B : The manufacturing cost and projected sales for a product are shown in figures A and B respectively. What is the minimum number of pieces that should be manufactured to avoid a loss ?

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Q: 146 (IAS/1994)
Consider the following figures marked A and B : The manufacturing cost and projected sales for a product are shown in figures A and B respectively. What is the minimum number of pieces that should be manufactured to avoid a loss ?

question_subject: 

Logic/Reasoning

question_exam: 

IAS

stats: 

0,8,14,8,9,3,2

keywords: 

{'manufacturing cost': [0, 1, 0, 0], 'minimum number': [1, 0, 0, 0], 'figures': [0, 0, 1, 1], 'pieces': [0, 2, 1, 2], 'sales': [0, 1, 0, 0], 'loss': [4, 3, 2, 4], 'product': [3, 1, 4, 10]}

The question is aimed at finding the point where the costs of manufacturing equal the sales revenue, known as the breakeven point. This is the minimum number of pieces that should be manufactured to avoid a loss.

Option 1 suggests 2000 pieces. If this is the correct answer, it suggests that the cost of producing 2000 units is the same as the revenue from selling 2000 units.

Option 2 (2500), option 3 (3000), and option 4 (3500) suggest a higher number of pieces. If any of these were correct, it would imply that the costs of production are not covered until a larger number of units are sold.

Thus, for a company to avoid running at a loss, it would have to produce and sell at least 2000 units. It is worth noting, though, that whilst no financial loss would be made in this scenario, no profit would be made either. Therefore, to make a profit, more than 2000 units would need to be produced and sold.