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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