Bailey Manufacturing sold 430,000 units of its product for $66 per unit in 2020. Variable cost per unit is $56, and total fixed costs are $1,720,000. Read the requirements. Requirements - Operating income is Requirement 2. Bailey's curre manufacturing equipment, whic maintain the same sales volum Recalculate (a) and (b) if the pr (a) The contribution margin v (b) Operating income would Requirement 3. Should Bailey Operating income is expected 1. Calculate (a) contribution margin and (b) operating income. 2. Bailey's current manufacturing process is labor intensive. Kate Wolf, Bailey's production manager, has proposed investing in state-of-the-art manufacturing equipment, which will increase the annual fixed costs to $5,590,000. The variable costs are expected to decrease to $52 per unit. Bailey expects to maintain the same sales volume and selling price next year. How would acceptance of Wolf's proposal affect your answers to (a) and (b) in requirement 1? 3. Should Bailey's executives accept Wolf's proposal? Explain. Print Done sting in state-of-the-art per unit. Bailey expects to b) in requirement 1? income alone, Bailey should 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 (b) Determine the formula used to calculate the operating income. Operating income is = Operating Income Requirement 2. Bailey's current manufacturing process is labor intensive. Kate Wolf, Bailey's production manager, has proposed investing in state-of-the-art manufacturing equipment, which will increase the annual fixed costs to $5,590,000. The variable costs are expected to decrease to $52 per unit. Bailey expects to maintain the same sales volume and selling price next year. How would acceptance of Wolf'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 (b) Operating income would change to under Wolf's proposal. Requirement 3. Should Bailey accept Wolf's proposal? Explain. Operating income is expected to income alone, Bailey should by the proposal. Based on the operating 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