Question

Beyond break-even point, net loss of a processing plant will be what per cent of the total investment?

• A. 0
• B. 25
• C. 50
• D. 100

Hint:

Below BEP = Loss region.
At BEP = Zero profit, Zero loss.
Beyond BEP = Profit region (Loss = $0\%$).

Answer 1

The Correct Option is A

Step 1: Understanding the Concept:
The break-even point (BEP) represents the operating volume at which total revenue equals total cost (zero profit and zero loss).
Key Formula or Approach:
\[ \text{Total Revenue } (TR) = \text{Total Cost } (TC) \implies \text{Profit} = 0, \quad \text{Loss} = 0 \]

Step 2: Detailed Explanation:
By definition, at the break-even point, an enterprise recovers all fixed and variable costs.
Beyond the break-even point (at production volumes exceeding the BEP), total revenue is strictly greater than total costs (\(TR > TC\)), generating a net operating profit.
Therefore, there is zero net financial loss incurred by the processing plant (0% loss).

Step 3: Final Answer:
Hence, beyond the break-even point, net loss will be 0 per cent of total investment, corresponding to option (A).