O'Reilly Manufacturing sold 320,000 units of its product for $60 per unit. Variable cost per unit is $42, and total fixed costs are $1,920,000. Required 1. Calculate (a) total contribution margin and (b) operating income. 2. O'Reilly's current manufacturing process is labour intensive. Kala Smith, O'Reilly's production manager, has proposed investing in state-of-the-art manufacturing equipment which will increase the annual fixed costs to $3,500,000. The variable costs are expected to decrease to $33 per unit. O'Reilly expects to maintain the same sales volume and selling price next year. How would acceptance of Smith's proposal affect your answers to (a) and (b) in requirement 1? 3. Should O'Reilly accept Smith's proposal? Explain. Requirement 1. Calculate (a) total contribution margin and (b) operating income. (a) Determine the formula used to calculate the total contribution margin, and then find the contribution margin. pages Get more help - = Total contribution margin Clear all Check answer