Carmody Ltd sells $300000$ V$262$ valves to the car and truck industry. Carmody has a capacity of $110000$ machine$-$hours and can produce three valves per machine$-$hour. V$262$s contribution margin per unit is $8.$ Carmody sells only $300000$ valves because $30000$ valves $(10\%$ of the good valves$)$ need to be reworked$.$ It takes one machine$-$hour to rework three valves so that $10000$ hours of capacity are lost in the rework process. Carmody$$s rework costs are $210000.$ Rework costs consist of:

Direct materials and direct rework labour $($variable costs$)3$ per unit

Fixed costs of equipment, rent and overhead allocation $4$ per unit

Carmody$$s process designers have come up with a modi$$cation that would maintain the speed of the process and would ensure $100\%$ quality and no rework. The new process would cost $315000$ per year. The following additional information is available:

$$ The demand for Carmody$$s V$262$ valves is $370000$ per year.

$$ Clohisey has asked Carmody to supply $22000$ T$971$ valves if Carmody implements the new design. The contribution margin per T$971$ valve is $10.$ Carmody can make tw T$971$ valves per machine$-$hour on the existing machine with $100\%$ quality and no rework.Which product should be manufactured, given the process modification?How much are net relevant benefits $/$ costs of implementing process modification?