Corporation A operates with machinery set A used in production of product A, and semi-annual production capacity of 90.000 units A. Machinery set B is used in production of product B and have semi-annual capacity of 50.000 units B. Future prediction estimates sales of 87.000 units A and 38.000 units B in 1st year half, and 82.000 units A and 42.000 units B in 2nd year half. Unit A is sold with margin of 85% and unit B is sold based on contribution margine ratio of 47%. Direct labor cost per hour is $15. We perform one and a half hour quality control inspection for product B and 45 minutes of QC insection for product A. Machinery set A is closing down to its useful life end and we need to make an investment decison. Option 1 is to invest $1.950.000 in overhauling old technology, we may keep running equipment for another five years with one major investment in 3rd year of $560.000 and 10% of salvage value after 5th year. Increase in fixed costs would be 4%. Product A Product B Direct Material per Unit Cost S 128,00 |$ 112,00 Direct Labor Hours per Unit 5,75 8,90 MOH in one year period 15.000.000,00 Fixed Expenses in one year period 48.500.000,00 For distribution of MOHC is used ABC method, and for the calculation use the folowing data: Manufacturing overhead cost structure Costs relating to set-ups $ 3.200.000,00 Costs relating to materials handling 28% Costs relating to quality control Total production overhead Consultants analysis shows that the total production overheads can be divided as follows:Consultants analysis shows that the total production overheads can be divided as follows: No. of No. of Set ups movements of | No. of inspections materials Product A 2150 4500 Product B 1850 3200 Total Market research also showed that for every 1% lower total sales price would leade to 2% increase in half year sales results for product A and 1.85% for product B. In the future, seling price for product A should be set on $450 and $ 600 for product B. Corporation have an options of investing 7.8 million in machinery set that will lower the overall variable costs of product A for 14% and ncrease in fixed costs would be 12%. Increase in total production capacity A would be 8.000 units. The salvage value after five years is 20% invested. Discount rate is 11% per annum. What should be done