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Patel Manufacturing sold 435,000 units of its product for $62 per unit in 2020 ....

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Accounting

image Patel Manufacturing sold 435,000 units of its product for $62 per unit in 2020 . Variable cost per unit is $52, and total fixed costs are $1,740,000. 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 expects to maintain the same sales volume and selling price next year. How would acceptance of Wagner'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 Inder Wagner's proposal. (b) Operating income would change to Requirement 3. Should Patel accept Wagner's proposal? Explain. Operating income is expected to by Based on the operating income alone, Patel 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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