Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

A company wants to buy a new machine to replace one, which is having frequent breakdown. It received offers for two models, M1 and M2.

A company wants to buy a new machine to replace one, which is having frequent breakdown. It received offers for two models, M1 and M2. Further details regarding these two models are given below

Particulars

M1

M2

Installed Capacity [Units]

10, 000

10, 000

Fixed overheads per annum

Rs.2, 40,000

Rs.1, 00,000

Estimated profit at the above capacity

Rs.1, 60,000

Rs.1, 00,000

The product manufactured using this type of machine, M1 or M2, is sold at Rs.100 per unit. You are required to determine,

Break Even level of sales for each model.

The level of sales at which both the models will earn the same profit.

The model suitable for different levels of demand for the product.

Step by Step Solution

3.44 Rating (160 Votes )

There are 3 Steps involved in it

Step: 1

Answer Solution Computation of Break Even Level for both the machines Machine M1 Fixed cost Rs2 40000 For working out the variable cost and contributi... blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Introduction to Management Accounting

Authors: Charles Horngren, Gary Sundem, Jeff Schatzberg, Dave Burgsta

16th edition

978-0133058819, 9780133059748, 133058816, 133058786, 013305974X , 978-0133058789

More Books

Students also viewed these Accounting questions