Required information PA11-2 (Algo) Making Automation Decision [L0 11-1, 11-2, 11-3, 11-5] {The foiiowing information appiies to the questions dispiayeo' beiow} Beacon Company is considering automating its production facility. The initial investment in automation would be $9.48 million, and the equipment has a useful life of 8 years with a residual value of $1,160,000. The company will use straight line depreciation. Beacon could expecta production increase of 31,000 units per year and a reduction of 20 percent in the labor cost per unit. Current (no Proposed automation) (automation) 88,800 units 119,008 units Per Per Production and sales volume Unit Total Unit Total Sales revenue 5 91 5 ? 5 91 5 ? Variable costs Direct materials 5 16 5 16 Direct labor 25 ? Variable manufacturing overhead 11 11 Total variable manufacturing costs 52 ? Contribution margin 5 39 ? 5 44 ? Fixed manufacturing costs 5 1,118,800 5 2,238,800 3 3 Net operating income PA11-2 Part 1 Required: 1-o. Complete the following table showing the totals. {Enter your answers in whole dollars, not in millions.) 0 Answer is complete and correct. Sales revenue 5 0,008,000 a $10,829,000 a Variable costs Direct materi a Is Direct labor 25 20 0 Variable manufacturing overhead 11 11 Total variable manufacturing costs 52 4? a Contribution margin 3,432,000 0 5,235,000 0 Fixed manufacturing costs 5 1,110,000 $ 2,230,000 $ 2,322,000 9 $ 3,005,000 a Net operating income 1-b. Does Beacon Company favor automation? 'Q'Yeso C-No PA11-2 Part 2 1 Determine the project's accounting rate of return. {Round your answer to 2 decimal places.) 9 Answer is complete but not entirely correct. PA11-2 Part 3 3. Determine the project's payback period. {Round your answer 1.0 2 decimal places.) PA11-2 Part 4 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} $ 9,596,554 PA11-2 Part 5 5. Recalculate the NPV using a 9 percent discount rate. {Future Value off-151, Present Value of $1, Future Value Annuityr of $1, Present Value Annuity Lf $_1_] (Use appropriate factarls} from the tables provided. Negative amount should be indicated by a minus sign. Enter the answer in whole dollars.) 0 Answer is complete but not entirely correct. 55 13,496,930 0