The correct answer is: B. 13 boats
The break-even point is the point at which a company’s revenue equals its costs. In other words, it is the point at which the company neither makes nor loses money.
To calculate the break-even point, we can use the following formula:
Break-even point = Fixed costs / Contribution margin per unit
The contribution margin per unit is the difference between the selling price per unit and the variable cost per unit.
In this case, the fixed costs are Rs. 2,60,000/- per month, the selling price per boat is Rs. 35,000/-, and the variable cost per boat is Rs. 15,000/-.
Therefore, the contribution margin per unit is Rs. 35,000/- – Rs. 15,000/- = Rs. 20,000/-
The break-even point is therefore:
Break-even point = Rs. 2,60,000/- / Rs. 20,000/- = 13 boats
Therefore, the firm must manufacture and sell 13 boats before it starts making a profit.