=+16-27 KK Quality improvement, relevant costs, relevant revenues OBJECTIVE 3 Lomax Ltd sells 300000 V262 valves to the car and truck industry. Lomax Ltd has a capacity of 110000 machine-hours and can produce three valves per machine-hour. V262’s contribution margin per unit is $8. Lomax Ltd sells only 300000 valves because 30000 valves (10% of the good valves) need to be reworked. It takes 1 machine-hour to rework three valves, so 10000 hours of capacity are used in the rework process. Lomax Ltd’s rework costs are $210000. Rework costs consist of: