IThe following Information appies to the questions displayed below Beacon Company is considering...
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IThe following Information appies to the questions displayed below Beacon Company is considering automating its production facility. The Initial Investment in automation would be $6.54 millon, and the equipment has a useful life of 5 years with a residual value of $1,090.000. The company will use straight-line depreciation. Beacon could expect a production Increase of 38,000 units per year and a reduction of 20 percent in the labor cost per unit Current (no automation) 72.000 units Proposed (automation) Production and sales volume 110.000 units Per Unit s 95 Per Unit Total Total S 95 Sales revenue Variable costs Direct materials Direct labor Variable manufacturing overhead 20 Total variable manufacturing costs Contribution margin Fixed manufacturing costs 46 S 49 $ 53 Net operating income
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