XYZ Company has an option to buy any one of the two machines N or M to manufacture its unique industrial component P. Each of the machines have the…

XYZ Company has an option to buy any one of the two machines N or M to manufacture its unique industrial component P. Each of the machines have the capacity to produce same quality of component P and are almost identical except for the fact that they are being manufactured by a different manufacturers. The specifications for each Machine are: Machine M: It has the capacity to produce 50,000 components of P per annum, the fixed costs being - 1,50,000 and could generate a profit of 2,25,000 on the sale of all the components produced. Machine N: It is also having the equal capacity to produce same number of components as that of Machine M per annum and all the components thus produced could be sold in the open market without any difficulty. Fixed cost of Machine N is 60,000 less than that of Machine M and yield a profit of 1,60,000 by selling all the components that are produced. The selling price of each component of P is 100. Required: (i) Calculate break even sales in value for each machine. (3 Marks) (ii) Calculate sales levels in units where both the machines are equally profitable. (2 Marks)