Beacon Company is considering automating its production facility. The initial investment in automation would be $7.99 million, and the equipment has a useful life of 6 years with a residual value of $1,150,000. 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. Production and sales volume Current (no automation) 83,000 units Proposed (automation) 124,000 units Per Unit Total Per Unit Total Sales revenue $ 98 $ ? $ 98 $ ? Variable costs Direct materials $ 15 $ 15 Direct labor 20 ? Variable manufacturing overhead 12 12 Total variable manufacturing costs 47 ? Contribution margin $ 51 ? $ 55 ? Fixed manufacturing costs 1,110,000 2,250,000 Net operating income ? ? Required: 1-b. Does Beacon Company favor automation?