Requirement $2.$ O'Reilly's current manufacturing process is labor intensive. Kate Hoffmann, O'Reilly's production manager, has proposed investing

in state$-$of$-$the$-$art manufacturing equipment, which will increase the annual fixed costs to $$5,525,000.$ The variable costs are expected to decrease

to $$58$ per unit. O'Reilly expects to maintain the same sales volume and selling price next year. How would acceptance of Hoffmann's proposal