12. A company is considering to expand production. It can go in either for an automatic machine casting Rs. 2,24,000 with an estimated life of 5.5 years or an ordinary machine costing Rs. 60,000 having an estimated life of 8 years. The annual sales and costs are estimated as follows: Automatic Machine Rs. Ordinary Machine Rs. Sales 1,50,000 1,50,000 Costs : Materials 50,000 50,000 Labour 12,000 60,000 Variable overheads 24,000 20,000 Compute the comparative profitability proposal under the pay back method and return on investment method. Explain the results.
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7500 rs the annual sales and cost are estimated as.
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