Chapter 3 Assignment CVP computations. Problem 1 Manufacturing sold 500,000 units of its product for $70 per unit in 2014. Variable cost per unit is $65, and total fixed costs are $2,000,000. Required: 1. Calculate (a) contribution margin and (b) operating income. 2. Garrett's current manufacturing process is labor intensive. Kate Schoenen, Garrett's production manager, has proposed investing in state-of-the-art manufacturing equipment, which will increase the annual fixed costs to $6,500,000. The variable costs are expected to decrease to $60 per unit. Garrett expects to maintain the same sales volume and selling price next year. How would acceptance of Schoenens proposal affect your answers to (a) and (b) in requirement 1