Division x of Harvest agricultural machinery ltd was considering adding a small weeding implement to...

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Accounting

Division x of Harvest agricultural machinery ltd was considering adding a small weeding implement to their product range. Sufficient capacity was currently available to cope with the additional production, but an extra special-purpose machine costing 40,000 would have to be acquired and paid for immediately prior to commencement of production. The machine could be traded in at the end of year five for 5,000.
A new sales promotion programme would be mounted to market the new product and this would cost 10,000 at the commencement of production and 5,000 at the end of the first year.
The management accountant produced the following forecast figures relating to the proposed net product:
\table[[Year,Sales,\table[[Variable],[Cost]],\table[[Fixed],[Cost]]],[1,,,f
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