Question
A company has a project to install a new machine exclusively for the manufacture of a new product which is expected to have good demand
A company has a project to install a new machine exclusively for the manufacture of a new product which is expected to have good demand and reasonably high margin. Maximum possible annual sales may not exceed Rs.50 lakhs and if there is competition it may fall considerably. The company has obtained quotations and short listed two offers for the new machine. Details in respect of the two models are given below:
Machine Model | ||
M1 | M2 | |
Maximum possible sales per year | Rs.50 Lakhs | Rs.50 Lakhs |
Fixed cost per year | 5 lakhs | 8 lakhs |
Estimated profit for maximum sales | 15 lakhs | 17 lakhs |
You are required to calculate Break even sales of each machine.
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