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2 Part 1 of 5 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 $11.82 million, and the equipment has a useful life of 9 years with a residual value of $1,110,000. The company will use straight-line depreciation. Beacon could expect a production Increase of 50,000 units per year and a reduction of 20 percent in the labor cost per unit. 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 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 S 52 S Per Unit $95 $ 20 30 12 62 $33 S Current (no automation) 77,000 units Per Unit 95 83588 Required: 1-a. Complete the following table showing the totals. (Enter your answers in whole dollars, not in millions.) 20 30 12 Current (no automation) 77,000 units 62 Total $? 33 ? $ 1,210,000 ? Total S 1,210,000 Proposed (automation) 127,000 units $ Per Unit $ 95 $ $20 ? 12 ? $39 Per Unit $ Proposed (automation) 127,000 units 95 20 Total $? 12 39 ? $ 2,220,000 ? S Total 2,220,000 3 Part 2 of 5 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 $11.82 million, and the equipment has a useful life of 9 years with a residual value of $1,110,000. The company will use straight-line depreciation. Beacon could expect a production Increase of 50,000 units per year and a reduction of 20 percent in the labor cost per unit. 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 Accounting rate of return Per Unit $ 95 % $ 20 30 12 62 $33 Current (no automation) 77,000 units Total $? ? $ 1,210,000 ? Proposed (automation) 127,000 units Per Unit $ 95 $20 ? 12 ? $39 Total $? 2. Determine the project's accounting rate of return. (Round your answer to 2 decimal places.) ? $ 2,220,000 ? 4 Part 3 of 5 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 $11.82 million, and the equipment has a useful life of 9 years with a residual value of $1,110,000. The company will use straight-line depreciation. Beacon could expect a production Increase of 50,000 units per year and a reduction of 20 percent in the labor cost per unit. 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 Payback period Per Unit $ 95 years $20 30 12 62 $33 Current (no automation) 77,000 units Total $? ? $ 1,210,000 ? Proposed (automation) 127,000 units Per Unit $95 $ 20 ? 12 $39 Total 3. Determine the project's payback period. (Round your answer to 2 decimal places.) ? $ 2,220,000 ? 5 Part 4 of 5 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 $11.82 million, and the equipment has a useful life of 9 years with a residual value of $1,110,000. The company will use straight-line depreciation. Beacon could expect a production increase of 50,000 units per year and a reduction of 20 percent in the labor cost per unit. 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 Per Unit Net present value $95 $ 20 30 12 62 $33 Current (no automation) 77,000 units Total $? ? $ 1,210,000 ? Proposed (automation) 127,000 units Total Per Unit $ 95 $ 20 ? 12 ? $ 39 ? $ 2,220,000 ? 4. Using a discount rate of 14 percent, calculate the net present value (NPV) of the proposed Investment. (Future Value of $1, Present Value of $1, Future Value Annulty of $1, Present Value Annuity of $1.) (Use appropriate factor(s) from the tables provided. Negative amount should be indicated by a minus sign. Enter the answer in whole dollars.) 6 Part 5 of 5 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 $11.82 million, and the equipment has a useful life of 9 years with a residual value of $1,110,000. The company will use straight-line depreciation. Beacon could expect a production Increase of 50,000 units per year and a reduction of 20 percent in the labor cost per unit. 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 Per Unit $95 Net present value $20 30 12 62 $33 Current (no automation) 77,000 units Total $? ? $ 1,210,000 ? Proposed (automation) 127,000 units Per Unit $ 95 $ 20 ? 12 ? $39 Total $? ? $ 2,220,000 ? 5. Recalculate the NPV using a 9 percent discount rate. (Future Value of $1, Present Value of $1, Future Value Annulty of $1, Present Value Annuity of $1.) (Use appropriate factor(s) from the tables provided. Negative amount should be Indicated by a minus sign. Enter the answer in whole dollars.)