A company has the option of buying one machine, from the two machines that are available AB and CD. From the information given below, compute
- BEP for each.
- The level of sales at which both are equally profitable.
- The range of sales at which one is more profitable than the other.
|
Machine AB |
Machine CD |
|
|
Output (units) |
20,000 |
20,000 |
|
Fixed costs per annum |
Rs. 60,000 |
Rs. 32,000 |
|
Profit at full capacity (Rs.) |
60,000 |
48,000 |
The annual market demand for such product is 20,000 units @ Rs. 10 per unit. (Both the machines will produce identical products.)