Knight Manufacturing sold 405,000 units of its product for $68 per unit in 2020. Variable cost per unit is $58, and total fixed costs are $1,620,000. Read the requirements .... Requirement 1. Calculate (a) contribution margin and (b) operating income. (a) Determine the formula used to calculate the contribution margin Requirements Contribution margin 1. Calculate (a) contribution margin and (b) operating income 2. Knight's current manufacturing process is labor intensive. Kate Bauer, Knight's production manager, has proposed investing in state-of-the-art manufacturing equipment, which will increase the annual fixed costs to $4,860,000. The variable costs are expected to decrease to $40 per unit. Knight expects to maintain the same sales volume and selling price next year. How would acceptance of Bauer's proposal affect your answers to (a) and (b) in requirement 1? 3. Should Knight's executives accept Bauer's proposal? Explain