Part A (5 marks) Cameron Ltd currently operates a manufacturing equipment that costs $250,000 with an accumulated depreciation of $70,000. It has a remaining useful life of 5 years and a current market value of $180,000. The annual variable manufacturing cost associated with using the equipment is $720,000. A more efficient equipment is available at a cost of $350,000. This equipment will have a 5-year useful life with no salvage value. The annual variable manufacturing cost of the new equipment is $580,000. The equipment needs special maintenance costing $30,000 per year. The supplier of the new equipment is willing to buy the old equipment at 90% of its market value. Cameron can sell it to others at market value. Should Cameron retain or replace the old equipment? Explain by doing an incremental analysis using the format we learnt in class. Part B (11 marks) Deka Ltd manufactures and sells three different models of DNA testing kits for pets. Expected sales and production information for each model for 2022 is as follows: Standard Premium Royalty Budgeted sales 8,000 7,000 6,000 Selling price per unit $100 $320 $490 Variable costs per unit $40 $180 $280 Fixed costs per unit $25 $50 $170 Machine hours required 0.5 0.8 1.4 Required (a) (3 marks) Assume that Deka can produce and sell as many units as it wants, which single product should Deka manufacture and sell? Explain with supporting calculations. (b) A fire broke out in the factory and destroyed one of the machines. Deka now has only 10,300 hours to produce the kits in 2022. For each of the following scenarios below, determine the sales mix that will allow Deka to maximize profits, and calculate the total contribution margin from your suggested sales mix. (0 (3 marks) Assume that Deka can produce and sell as many units as it wants. () (5 marks) Assume that due to the economic downturn, the market demand for Deka's products is 5,000 units for each of the three models