Required information PA11-2 [Algo} Making Automation Decision [L0 11-1, 11-2, 11-3, 11-5] {The foiiowing information appiies to the questions dispiayed beioiiiijr Beacon Company is considering automating its production facility. The initial investment in automation would be $8.94 million, and the equipment has a useful life of? years with a residual value of $1,100,000. The company will use straight line depreciation. Beacon could expect a production increase of 49,000 units per year and a reduction of 20 percent in the labor cost per unit. Current (no Proposed automation) (automation) ??,BGG units 126,639 units Per Per Production and sales volume Unit Total Unit Total Sales revenue 5 95 5 ? 5 95 5 ? Variable costs Direct materials 5 19 5 19 Direct labor 25 ? Variable manufacturing overhead 16 16 Total variable manufacturing costs 54 ? Contribution margin 5 42 ? 5 4? ? Fixed manufacturing costs 5 1,138,360 5 2,258,606 a 3 Net operating income PA11-2 Part 1 PA11-2 Part 1 Required: 1-a. Complete the following table showing the totals. {Enter your answers in whole dollars, not in millions.) 0 Answer is; complete and correct. 1Variable costs Sales revenue 55 1392000 0 $ 96 $12,095,000 a 0 Direct materials 19 1 Direct labor Variable manufacturing overhead - Total variable manufacturing costs Contribution margin 3,234,000 0 5,922,000 0 Fixed manufacturing costs $ 1,130,000 $ 2,250,000 Net operating income $ 2,104,000 0 $ 3,6?2,000 0 1-b. Does Beacon Company favor automation? @Yes C'No PA11-2 Part 2 1 Determine the project's accounting rate of return. {Round your answer to 2 decimal places.) 0 Answer is Domplete but not entirely mrredc. m PA11-2 Part 3 3. Determine the project's payback period. {Round your answer to 2 decimal places.) 0 Answer is complete but not entirer eorrect. PA11-2 Part 4 4. Using a discount rate of 15 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 factoris) from the tables provided. Negative amount should be indicated by a minus sign. Enter the answer in whole dollars} 6 Answer is complete but not entirel'glr correct. 5' 11,410,262 0 PA11-2 Part 5 5. Recalculate the NPV using a 10 percent discount rate. I'Future Value of $1, Present Value of $1, Future Value lilnnuitg,r of $1, Present Value Annulty0_f$_1_] (Use appropriate factorts} from the tables provided. Negative amount should be indicated by a minus sign. Enter the answer in whole dollars.) $ 14,953.93