Pendleton Engineering makes cutting tools for metalworking operations. It makes two types of tools: R3, aregular cutting tool, and HP6, a high-precision cutting tool. R3 is manufactured on a regular machine, but HP6must be manufactured on both the regular machine and a high-precision machine. The following information isavailable.Additional information includes the following:? Pendleton faces a capacity constraint on the regular machine of 50,000 hours per year. Notice that bothproducts need some regular machine time.? The capacity of the high-precision machine is not a constraint.? Of the $550,000 budgeted fixed overhead costs of HP6, $300,000 are lease payments for the highprecisionmachine. This cost is charged entirely to HP6 because Pendleton uses the machine exclusivelyto produce HP6. The lease agreement for the high-precision machine can be canceled at any timewithout penalties.? All other overhead costs are fixed and cannot be changed.a. What product mix?that is, how many units of R3 and HP6?will maximize Pendleton?s operatingincome? Show your calculations.b. Suppose Pendleton can increase the annual capacity of its regular machines by 15,000 machinehoursby leasing more machines at a cost of $150,000. Should Pendleton increase the capacity of theregular machines by 15,000 machine hours? By how much will Pendleton?s operating incomeincrease? Show your calculations.c. Suppose that the capacity of the regular machines has been increased to 65,000 hours. Pendleton hasbeen approached by Carter Corporation to supply 20,000 units of another cutting tool, S3, for $120per unit. Pendleton must either accept the order for all 20,000 units or reject it totally. S3 is exactlylike R3 except that its variable manufacturing cost is $70 per unit. (It takes one hour to produce oneunit of S3 on the regular machine, and variable marketing cost equals $15 per unit.) What productmix should Pendleton choose to maximize operating income? Show your calculations.