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Question: A company engaged in production of dairy products wants to buy a new spray dryer to replace one which is having frequent breakdown. It received offers for two models of spray dryers S1 and S 2. Further details regarding these models are given below:
The skimmed milk powder manufactured using this type of machine (S1 or S2) is sold at Rs. 100 per unit.
You are required to determine:
(a) Breakeven level of sales for each model.
(b) The level of sales at which both the models will earn the same profit.
(c) The model suitable for different levels of demand for the product.
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