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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
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 $9.27 million, and the equipment has a useful life of 8 years with a residual value of $1,190,000. The company will use straight- line depreciation. Beacon could expect a production increase of 32,000 units per year and a reduction of 20 percent in the labor cost per unit. Production and sales volume Sales revenue Variable costs Dire mater Direct labor Variable manufacturing overhead Total variable manufacturing costs Contribution margin Fixed manufacturing costs Net operating income PA11-2 Part 1 Required: 1-b. Does Beacon Company favor automation? Req 1A Req 1B Current (no automation) 72,000 Proposed (automation) 104, 000 units units Complete this question by entering your answers in the tabs below. Complete the following table showing the totals. Note: Enter your answers in whole dollars, not in millions. Per Unit $ 96 $ 20 20 11 51 $ 45 Total $? 1,050, 000 Per Unit $96 $ 20 ? ? $ 49 Total $? ? 2, 240,000
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