Required Information PA11-2 (Algo) Making Automation Decision (LO 11-1, 11-2, 11-3, 11-5] [The following information applies to the questions displayed below) Beacon Company is considering automating its production facility. The initial investment in automation would be $9.49 million, and the equipment has a useful life of 7 years with a residual value of $1,090,000. The company will use straight- line depreciation. Beacon could expect a production increase of 30,000 units per year and a reduction of 20 percent in the labor cost per unit Current (no automation) R2, units Per Unit Total 95 $ Proposed (automation) 112,000 units Per Unit Total 595 $ 525 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 $15 25 M 4 5.67 552 5 1,150,00 SON PA11-2 Part 2 2. Determine the project's accounting rate of return (Round your answer to 2 decimal places) Astounting rate ratum 96 Required Information PA11-2 (Algo) Making Automation Decision (LO 11-1, 11-2, 11-3, 11-5) [The following information applies to the questions displayed below) Beacon Company is considering automating its production facility. The initial investment in automation would be $9.49 million, and the equipment has a useful life of 7 years with a residual value of $1090,000. The company will use straight- line depreciation Beacon could expect a production increase of 30,000 units per year and a reduction of 20 percent in the labor cost per unit Current (no automation) 82.00 units Per Unit Total $ 95 $ Proposed (automation) 112,00 units Par Unit Total $95 $? Production and sales volume Sales revenue Variable costs Direct materials Direct labor Variable manufacturing overhead Total variable manufacturing costs Contribution margin Fixed manufacturing costs Niet operating income 5.15 25 8 $15 2 8 5.47 S/5 5 1,150 3231 PA11-2 Part 3 3. Determine the projects payback period (Round your answer to 2 decimal places) Pays as part years ! Required Information PA11-2 (Algo) Making Automation Decision (LO 11-1, 11-2, 11-3, 11-5] The following information applies to the questions displayed below.) Beacon Company is considering automating its production facility. The initial investment in automation would be $9.49 million, and the equipment has a useful life of 7 years with a residual value of $1,090,000. The company will use straight- line depreciation Beacon could expect a production increase of 30,000 units per year and a reduction of 20 percent in the labor cost per unit. Current (no automation) 82,00 units Per Unit Total $ 95 Proposed (automation) 112.000 units Per unit 3 Total $ 5 15 Production and sales volume Sales revenue Variable costs Direct materials Direct labor Variable manufacturing overhead Total variable sanufacturing costs Contribution margin Fixed sanufacturing costs Net operating income $15 25 81 ces 8 $ 47 552 $22 PA11-2 Part 4 4. Using a discount rate of 13 percent calculate the net present value (NPV) of the proposed Investment future Value $1. Present Value of 51. Ece Valus. Anot of $1. Presenter Anton (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 Required information PA11-2 (Algo) Making Automation Decision (LO 11-1, 11-2, 11-3, 11-5) [The following information applies to the questions displayed below.) Beacon Company is considering automating its production facility. The initial investment in automation would be $9.49 million, and the equipment has a useful life of 7 years with a residual value of $1,090,000. The company will use straight- line depreciation. Beacon could expect a production increase of 30,000 units per year and a reduction of 20 percent in the labor cost per unit. Current (no automation) 82,808 units Per Unit Total $ 95 $ Proposed (automation) 112,0 units Per Unit Total $95 S? 515 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 $ 15 25 8 48 5.47 5.52 $50 $ 2,910. PA11-2 Part 5 5. Recalculate the NPV using a 8 percent discount rate. $1. Best Eture Value Annulty of $1. Present VAUS Annuity of 5.1) (Use appropriate foctor(s) from the tables provided. Negative amount should be indicated by a minus sign. Enter the answer in whole dollars.) Helbest value Next Proy Required Information PA11-2 (Algo) Making Automation Decision (LO 11-1, 11-2, 11-3, 11-5] [The following information applies to the questions displayed below) Beacon Company is considering automating its production facility. The initial investment in automation would be $9.49 million, and the equipment has a useful life of 7 years with a residual value of $1,090,000. The company will use straight- line depreciation. Beacon could expect a production increase of 30,000 units per year and a reduction of 20 percent in the labor cost per unit Current (no automation) R2, units Per Unit Total 95 $ Proposed (automation) 112,000 units Per Unit Total 595 $ 525 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 $15 25 M 4 5.67 552 5 1,150,00 SON PA11-2 Part 2 2. Determine the project's accounting rate of return (Round your answer to 2 decimal places) Astounting rate ratum 96 Required Information PA11-2 (Algo) Making Automation Decision (LO 11-1, 11-2, 11-3, 11-5) [The following information applies to the questions displayed below) Beacon Company is considering automating its production facility. The initial investment in automation would be $9.49 million, and the equipment has a useful life of 7 years with a residual value of $1090,000. The company will use straight- line depreciation Beacon could expect a production increase of 30,000 units per year and a reduction of 20 percent in the labor cost per unit Current (no automation) 82.00 units Per Unit Total $ 95 $ Proposed (automation) 112,00 units Par Unit Total $95 $? Production and sales volume Sales revenue Variable costs Direct materials Direct labor Variable manufacturing overhead Total variable manufacturing costs Contribution margin Fixed manufacturing costs Niet operating income 5.15 25 8 $15 2 8 5.47 S/5 5 1,150 3231 PA11-2 Part 3 3. Determine the projects payback period (Round your answer to 2 decimal places) Pays as part years ! Required Information PA11-2 (Algo) Making Automation Decision (LO 11-1, 11-2, 11-3, 11-5] The following information applies to the questions displayed below.) Beacon Company is considering automating its production facility. The initial investment in automation would be $9.49 million, and the equipment has a useful life of 7 years with a residual value of $1,090,000. The company will use straight- line depreciation Beacon could expect a production increase of 30,000 units per year and a reduction of 20 percent in the labor cost per unit. Current (no automation) 82,00 units Per Unit Total $ 95 Proposed (automation) 112.000 units Per unit 3 Total $ 5 15 Production and sales volume Sales revenue Variable costs Direct materials Direct labor Variable manufacturing overhead Total variable sanufacturing costs Contribution margin Fixed sanufacturing costs Net operating income $15 25 81 ces 8 $ 47 552 $22 PA11-2 Part 4 4. Using a discount rate of 13 percent calculate the net present value (NPV) of the proposed Investment future Value $1. Present Value of 51. Ece Valus. Anot of $1. Presenter Anton (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 Required information PA11-2 (Algo) Making Automation Decision (LO 11-1, 11-2, 11-3, 11-5) [The following information applies to the questions displayed below.) Beacon Company is considering automating its production facility. The initial investment in automation would be $9.49 million, and the equipment has a useful life of 7 years with a residual value of $1,090,000. The company will use straight- line depreciation. Beacon could expect a production increase of 30,000 units per year and a reduction of 20 percent in the labor cost per unit. Current (no automation) 82,808 units Per Unit Total $ 95 $ Proposed (automation) 112,0 units Per Unit Total $95 S? 515 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 $ 15 25 8 48 5.47 5.52 $50 $ 2,910. PA11-2 Part 5 5. Recalculate the NPV using a 8 percent discount rate. $1. Best Eture Value Annulty of $1. Present VAUS Annuity of 5.1) (Use appropriate foctor(s) from the tables provided. Negative amount should be indicated by a minus sign. Enter the answer in whole dollars.) Helbest value Next Proy