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Daniels Manufacturing sold 440,000 units of its product for $72 per unit in 2020 . Variable cost per unit is $60, and total fixed costs are $1,760,000. Read the requirements. Requirement 1. Calculate (a) contribution margin and (b) operating income. (a) Determine the formula used to calculate the contribution margin. The contribution margin is (b) Determine the formula used to calculate the operating income. Operating income is Requirement 2. Daniels's current manufacturing process is labor intensive. Kate Keller, Daniels's production manager, has proposed investing in state-of-the-art manufacturing equipment, which will increase the annual fixed costs to $5,720,000. The variable costs are expected to decrease to $58 per unit. Daniels expects to maintain the same sales volume and selling price next year. How would acceptance of Keller's proposal affect your answers to (a) and (b) in requirement 1 ? Recalculate (a) and (b) if the proposal is accepted. (a) The contribution margin would be under Keller's proposal. (b) Operating income would change to Requirement 3. Should Daniels accept Keller's proposal? Explain. Operating income is expected to by Based on the operating income alone, Daniels should the proposal. Manangement would consider other factors before making the final decision. It is likely that product quality improve as a result of using state-of-the-art equipment. However, the proposal the company's fixed cost. This will the company's operating leverage and risk

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