Patel Manufacturing sold $300$ comma $000300,000$ units of its product for $ $50$$$50$ per unit. Variable cost per unit is $ $35$$$35,$ and total fixed costs are $ $1$ comma $800$ comma $000$$$1,800,000.$

Required

$1.$

Calculate$($a$)$ total contribution margin and$($b$)$ operating income.

$2.$

PatelPatel$\text{'}$s current manufacturing process is labour intensive. KateKate SchoenenSchoenen$,$ PatelPatel$\text{'}$s production$$ manager, has proposed investing in$$ state$-$of$-$the$-$art manufacturing equipment which will increase the annual fixed costs to $ $3$ comma $400$ comma $000$$$3,400,000.$ The variable costs are expected to decrease to $ $23$$$23$ per unit. PatelPatel expects to maintain the same sales volume and selling price next year. How would acceptance of SchoenenSchoenen$\text{'}$s proposal affect your answers to$($a$)$ and$($b$)$ in requirement$1?$

$3.$

Should PatelPatel accept SchoenenSchoenen$\text{'}$s $$proposal$?$ Explain.