[The following information applies to the questions displayed below.]Beacon Company is considering automating its production facility. The initial investment in automation would be $9.19 million, and the equipment has a useful life of 8 years with a residual value of $1,030,000. The company will use straight-line depreciation. Beacon could expect a production increase of 39,000 units per year and a reduction of 20 percent in the labor cost per unit. Current (no automation)Proposed (automation) 83,000 units122,000 unitsProduction and sales volumePer UnitTotalPer UnitTotalSales revenue$95$ ?$95$ ?Variable costsDirect materials$19 $19 Direct labor 20? Variable manufacturing overhead 99 Total variable manufacturing costs 48? Contribution margin$47?$51?Fixed manufacturing costs$ 1,210,000$ 2,160,000Net operating income??

Required Information 83,000 units 122,000 units Production and Sales Volume Per Unit Total Per Unit Total Sales revenue $ 95 $ 95 Variable costs Direct materials S 19 19 Direct labor 20 Variable manufacturing overhead 9 9 Total variable manufacturing costs 48 Contribution margin $ 47 $ $ 51 Fixed manufacturing costs $ 1,210,000 $ 2,160,000 Net operating income 1-b. Does Beacon Company favor automation? O Yes O No