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Please do all of them. Thank you ! Required information [The following information applies to the questions displayed below.] Beacon Company is considering automating its
Please do all of them. Thank you
! Required information [The following information applies to the questions displayed below.] Beacon Company is considering automating its production facility. The initial investment in automation would be $12.99 million, and the equipment has a useful life of 10 years with a residual value of $1,090,000. The company will use straight- line depreciation. Beacon could expect a production increase of 37,000 units per year and a reduction of 20 percent in the labor cost per unit. Current (no automation) 76,000 units Per Unit Total $ 99 Proposed (automation) 113,000 units Per Unit Total $ 99 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 $ 55 $ 20 ? 9 ? $ 58 ? $ 1,170,000 $ 2,280,000 ? ? Required: 1-a. Complete the following table showing the totals. (Enter your answers in whole dollars, not in millions.) Current (no automation) 76,000 units Per Unit Total Proposed (automation) 113,000 units Per Unit Total $ 99 $ 99 $ 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 $ 55 $ 58 $ 1,170,000 $ 2,280,000 1-b. Does Beacon Company favor automation? O Yes O No 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 14 percent, calculate the net present value (NPV) of the proposed investment (Future Value of $1, Present Value of $1. Future Value Annuity of $1. Present Value Annuity of $1.) (Use appropriate factor(s) from the tables provided. Negative amount should be indicated by a minus sign. Enter the answer in whole dollars.) Net present value 5. Recalculate the NPV using a 9 percent discount rate. (Future Value of $1. Present Value of $1. Future Value Annuity of $1. Present Value Annuity of $1.) (Use appropriate factor(s) from the tables provided. Negative amount should be indicated by a minus sign. Enter the answer in whole dollars.) Net present valueStep by Step Solution
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