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 $10.08 million, and the equipment has a useful life of 8 years with a residual value of $1,040,000. The company will use straight- line depreciation. Beacon could expect a production increase of 35,000 units per year and a reduction of 20 percent in the labor cost per unit. Proposed (automation) 116,000 units Production and sales volume. Current (no automation) 81,000 units Per Unit Per Total Unit Total $ 95 $7 $ 95 $7 $ 17 $ 17 201 ? 12 49 $46 ? ? $ 50 Sales revenue Variable costs birect materials Direct labor Total variable manufacturing costs Variable manufacturing overhead, 12 Contribution margin Fixed manufacturing costs Net operating income PA11-2 Part 1 $1,210,000 7 $ 2,270,000 2