Walton Ltd. is considering replacing an existing machine with a new and faster machine that will produce a more reliable product (i.e., better tolerances). The switch to a new machine resulting in a superior product is expected to allow Walton to increase its sale price for the product. The switch will increase fixed costs, but not the variable costs. The cost and revenue estimates are as follows:

Cost Item

Old Machine

New Machine

Monthly fixed costs

$

310,000

$

690,000

Variable cost per unit

33

35

Sales price per unit

44

50