How to deal with Labour???????

AB Ltd. Received an order from a valuable client of supplying 3,00,000 pieces of
components @ Rs. 750 unit a year at a rate of 25,000 per month. Cost of manufacturing
of the component is estimated as:
Rs. /Unit
Material 500
Labour 50
Variable overhead 40% of labour 20
Variable selling & distribution overhead 2
Fixed Production overheads is 30 lakhs.
5
There is a penalty/ reward clause of Rs. 30.00 per unit for supplying less / more than
25,000 units per month. To adhere to the schedule of supply, company procured a
special machine costing Rs. 20 lakhs, which is expected to fetch Rs. 5 lakhs after the
end of the contract of supply of components. After supply of machine, supplier offered
another advanced technology machine ( new in the market) with 20% more output per
hour but there will be material wastage 0.5%. The new machine cost is Rs. 15 lakhs but
will have no resale value after completion of the project. If advanced version machine is
purchased, earlier machine recently supplied will be immediately taken back at Rs 15
lakhs. Fixed cost of maintenance for the advanced version will increase by Rs. 20,000
per month. Entire job is expected to be completed within 10 months. Advise whether the
company should go for the improved version machine.