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Required information PA11-2 (Algo) Making Automation Decision (LO 11-1, 11-2, 11-3, 11-5) The following information applies to the questions displayed below.) Beacon Company is considering automating its production facility. The initial investment in automation would be $6.49 million, 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 41,000 units per year and a reduction of 20 percent in the labor cost per unit. Current (no automation) 78,000 units Per Unit Total $ 98 Proposed (automation) 119,000 units Per Unit Total $ 98 $ $ Production and sales volume Sales revenue Variable costs Direct materials Direct labor Variable manufacturing overhead Total variable manufacturing costs Contribution margin Fixed manufacturing costs Net operating income 20 15 9 44 54 20 ? 9 7 57 $ $ $ 2,200, aee $ 1,100,000 ? Required: 1-a. Complete the following table showing the totals. (Enter your answers in whole dollars, not in millions.) Current (no automation) 78,000 units Per Unit Total $ 98 Proposed automation) 119,000 units Per Unit Total $ 98 S 20 $ 20 15 Production and Sales Volume Sales revenue Variable costs Direct materials Direct labor Variable manufacturing overhead Total variable manufacturing costs Contribution margin Fixed manufacturing costs Net operating income 9 9 44 $ 54 S 57 S 1.100.000 $ 2,200,000 2. Determine the project's accounting rate of return (Round your answer to 2 decimal places.) Accounting rate of return % 3. Determine the project's payback period (Round your answer to 2 decimal places.) Payback period years 4. Using a discount rate of 15 percent calculate the net present value (NPV) of the proposed investment. Enture Value 1 Prement Value of 51. Eutute Value Annuity of $1. Present Value Anultyal $1) (Use appropriate foetorts) from the inbles provided. Negative amount should be indicated by a minus sign. Enter the answer in whole dollars.) Nut presenta 5. Recalculate the NPV using a 10 percent discount rate (Euture Value of S1, Pecsent Value of $1. Euture Value Annuity of 51. Present Value AnnullyofS1) (Use appropriate factor(s) from the tables provided. Negative amount should be indicated by a minus sign Enter the answer in whole dollars.) Niton Valo

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