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Required information [ The following information applies to the questions displayed below. ] Beacon Company is considering automating its production facility. The initial investment in
Required information
The following information applies to the questions displayed below.
Beacon Company is considering automating its production facility. The initial investment in automation would be $
million, and the equipment has a useful life of years with a residual value of $ The company will use straight
line depreciation. Beacon could expect a production increase of units per year and a reduction of percent in
the labor cost per unit.
Determine the project's payback period. Round your answer to decimal places.Beacon Company is considering automating its production facility. The initial investment in automation would be $ million, and the equipment has a useful life of years with a residual value of $ The company will use straightline depreciation. Beacon could expect a production increase of units per year and a reduction of percent in the labor cost per unit.
Current no automation Proposed automation
units units
Production and sales volume Per Unit Total Per Unit Total
Sales revenue $ $ $ $
Variable costs
Direct materials $ $
Direct labor
Variable manufacturing overhead
Total variable manufacturing costs
Contribution margin $ $
Fixed manufacturing costs $ $
Net operating income
Determine the project's payback period. Round your answer to decimal places.
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