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Beacon Company is considering automating its production facility. The initial investment in automation would be $$10\mathrm{.}31$ million, and the equipment has a useful life of $8$ years with a residual value of $$1,030,000.$ The company will use straightline depreciation. Beacon could expect a production increase of $43,000$ units per year and a reduction of $20$ percent in the labor cost per unit.

$\backslash$table$[[$Production and sales volume,$\backslash$table$[[$Current $($no$],[$automation$)],[82,000$ units$]],\backslash$table$[[$Proposed$],[($automation$)],[125,000$ units$]]],[\backslash$table$[[$Per$],[$Unit$]],$Total,$\backslash$table$[[$Per$],[$Unit$]],$Total$],[$$$96,$$ $?,$$$96,$$ $?],[$Variable costs,,,,$],[$Direct materials,$$16,,$$$16,],[$Direct labor,$15,$A$,?,],[\backslash$table$[[$Variable manufacturing$],[$overhead$]],9,,9,],[\backslash$table$[[$Total variable manufacturing$],[$costs$]],40,,?,],[\backslash$table$[[$Contribution margin$],[$Fixed manufacturing costs$]],$$$56,?{?}^{?}$$$240,000,$$$59,\backslash$table$[[?$Beacon Company is considering automating its production facility. The initial investment in automation would be $$10\mathrm{.}31$ million, and the equipment has a useful life of $8$ years with a residual value of $$1,030,000.$ The company will use straight$-$line depreciation. Beacon could expect a production increase of $43,000$ units per year and a reduction of $20$ percent in the labor cost per unit.

Current $($no automation$)$ Proposed $($automation$)$

$82,000$ units $125,000$ units

Production and sales volume Per Unit Total Per Unit Total

Sales revenue $ $96$ $ $?$ $ $96$ $ $?$

Variable costs

Direct materials $ $16$ $ $16$

Direct labor $15?$

Variable manufacturing overhead $99$

Total variable manufacturing costs $40?$

Contribution margin $ $56?$ $ $59?$

Fixed manufacturing costs $ $1,240,000$ $ $2,330,000$

Net operating income $??$

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