PA11-2 Making Automation Decision [LO 11-1, 11-2, 11-3, 11-5) (The following infomation applies to the questions displayed below Beacon Company is considering automating its produclon facility. The intial investment in automation would be $8.92 millon, and the equipment has a useful life of 7 years witth a residual value of $1,010,000. The company will une straight ne depreciation. Beacon could expect a production increese of 36,000 units per year and a reduction of 20 percent in the labor cost per unit Curent ho automation) Proposed (automation 94000 units Per Protn and es volume 120.000 unts Per Unit S90 Tots Total Unit Seles evenue $ 90 Vaab materas 20 riabie manuactuing overhesd i venate manutactuing costs Coneibuion mgn Fed manucung co 44 $46 $ 50 $1210000 $2250000 Net operating mcome References Section Break PA2 Making Automtion DecsionLO 11 1 25a .5) MacBook Air ww. Y D G K PA11-2 Part 1 Required: 1-a. Complete the following table showing the totals. (Enter all answers In whole dollars.) Current (no automation) Proposed (automation) Production and Sales Volume $ 84,000 Units $120,000 Units Per Unit Total Per Unit Total Sales Revenue $ 90 7,200,000 $ 90 10,800,000 Variable Costs Direct Materials 16 16 Direct Labor 20 20 Variable Manufacturing Overhead 8 8 Total Variable Manufacturing Costs Contribution Margin 44 48 46 $ 50 Fixed Manufacturing Costs S 1,210,000 2,250,000 Net Operating Income 1-b. Does Beacon Company favor automation? Yes No Reterences eBook & Resources Worksheet 3. value 2.00 points PA11-2 Part 2 2. Determine the project's accounting rate of return. (Round your answer to 2 decimal places.) % Accounting Rate of Return References eBook & Resources Worksheet Leaming Objective: 11-01 Calculate the accounting rate of retum and describe its major weaknesses. Edaming Objective: bpltal investments PA11-2 Part 2 Leaning Objective: 11-02 Calculate the payback period and describe its major weaknesses. Difficulty: 3 Hard Leaming Objective 11-03 Calculste net present valueand doscrbe aby itis supedor 2.00 points PA11-2 Part 3 3. Determine the project's payback period. (Round your answer to 2 decimal places.) Payback Period years References eBook & Resources Worksheet Learning Objective: 11-01 Caiculate the accounting rate of return and describe its major weaknesses. Leaming Ob capital inves PA11-2 Part 3 Leaming Objective: 11-02 Galculate the payback period and descrbe its major weaknesses. Difficulty: 3 Hard Learning Objective: 11- Required Information velue 2.00 points PA11-2 Part 4 4 Using a discount rate of 14 percent, calculate the net present value (NPV) of the proposed investment. (Euture Value of $1, Present Value of $1. Future Value Annuity of $1, Present Value Annuity of $1.) (Use appropriate factoris) from the tables provided. Negative amount should be indicated by a minus sign. Enter the answer in whole dollar. Round the final answer to nearest whole dollars.) N Prt V Raferences eBook & Resources Leaning Cbjective 11-01 Calodse the sccounting rate of reum and dencrbe major L ng e ehe mhd toana y ec p t Worksheet Leaing Chcve 11-02 Carcaate payoack penod and descrbe s a PA112 Parn 4 Dficuty 3 Hard superior cheies Chemwa MacBook Air % 3 delete E R T P velues 2.00 points Required information PA11-2 Part 5 5. Recalculate the NPV using a 9 % discount rate. (Future Value of S1, Present Value of $1, Future Value Annuity of $1. Present Value Annuity of $1) (Use appropriate factor(s) from the tables provided. Nega amount should be Indicated by a minus sign. Enter the answer in whole dolar. Round the final answor to nearest whole dollars) Net Present Value References eBook & Resources Worksheet Leaming Cbjective 11-01 Calcute P sccountng rae of retum and describa its major weaenesses Lingcetv11-05 Use he net presant wun ehd to anaya ep vstmants y excusve PA11-2 Part 5 Leaming Cbjectiv: 11-02 Cacate the payeack penod and descrbie its jo weeknesses Difficuity: 3 Hard Leaming Cbietive 11-03 Cacate tet present value and describe why ts superion the other caotal budgeng techrigues MacBook Air E T