Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

1 - Determine the project accounting rate of return (round answer to two decimal points) 2 - Deternine project payback period 3 - using a

1 - Determine the project accounting rate of return (round answer to two decimal points)
2 - Deternine project payback period
3 - using a discount rate of 14 percent, calculate the net present value (NVP) of the proposed investment (use future / present value table factors)
4 - Recalculate the NPV using a 9 percent discount rate
5 - complete the table showing totals
image text in transcribed
image text in transcribed
[The following information applies to the questions displayed below.) Beacon Company is considering automating its production facility. The initial investment in automation would be $12.64 million, and the equipment has a useful life of 10 years with a residual value of $1,140,000. 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 Proposed automation) (automation) 73,000 units 116,000 units Per Per Production and sales volume Unit Total Unit Total Sales revenue $ 98 $ ? $ 98 $ 2 Variable costs Direct materials $ 20 $ 20 Direct labor 30 2 Variab manufacturing overhead 9 9 Total variable manufacturing costs 59 2 Contribution margin $ 39 2 $ 45 2 Fixed manufacturing costs $ 1,120,000 $ 2,170,000 Net operating income ? 2 Required: 1-a. Complete the following table showing the totals. (Enter your answers in whole dollars, not in millions. Current (no automation) 73,000 units Per Unit Total Proposed (automation) 116,000 units Per Unit Total $ 98 $ 98 $ 20 $ 20 30 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 59 $ 39 $ 45 $ 1,120,000 $ 2,170,000

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Fraud Analytics Strategies And Methods For Detection And Prevention

Authors: Delena D. Spann

1st Edition

111823068X, 978-1118230688

More Books

Students also viewed these Accounting questions

Question

8. Explain the contact hypothesis.

Answered: 1 week ago

Question

2. Define the grand narrative.

Answered: 1 week ago