Required informationPA11-2 (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 $6.78million, and the equipment has a useful life of 5 years with a residual value of $1,080,000. The company will use straight-line depreciation. Beacon could expect a production increase of 48,000 units per year and a reduction of 20 percent inthe labor cost per unit.Current (noAutomation)83,000 unitsPerUnit$ 94Proposed(automation)131,000 unitaPerProduction and sales volumeSales revenueTotalUnit$94Total$ 2Variable costsDirect materialsDirect laborVariable manufacturing overheadTotal variable manufacturing$ 18$1825101053costsContribution narginFixed manufacturing conts$ 41$ 467.$ 1,160,000$2,330,000Net operating incomePA11-2 Part 22. Determine the project's accounting rate of return. (Round your answer to 2 decimal places.)Accounting rate of returnPA11-2 (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 $6.78million, and the equipment has a useful life of 5 years with a residual value of $1,080,000. The company will use straight-line depreciation. Beacon could expect a production increase of 48,000 units per year and a reduction of 20 percent inthe labor cost per unit.Current (noautomation)83,000 unitsProposed(automation)131,000 unitaPerPerProduction and sales volumeSales revenueVariable costsUnitTotal$ 7UnitTotal$ 2$ 94$94Direct materialsDirect labor$ 18$ 1825Variable manufacturing overhead1010Total variable manufacturingcosts53Contribution marginFixed manufacturing conts$ 41$ 46$ 1,160,000$ 2,330,000.Net operating incomePA11-2 Part 33. Determine the project's payback period. (Round your answer to 2 decimal places.)Payback periodyearsPA11-2 (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 $6.78million, and the equipment has a useful life of 5 years with a residual value of $1,080,000. The company will use straight-line depreciation. Beacon could expect a production increase of 48,000 units per year and a reduction of 20 percent inthe labor cost per unit.Current (noautomation)83,000 unitaProposed(automation)131,000 unitsPerUnit$ 94PerProduction and sales volumeSales revenueVariable costaUnitTotal$ 94$ 2Total$7Direct materialsDirect labor$ 18$ 1825Variable manufacturing overhead1010Total variable manufacturingconts53Contribution marginrixed manufacturing costa$ 417.$2,330,000$46$1,160,000Net operating inconePA11-2 Part 44. Using a discount rate of 14 percent, calculate the net present value (NPV) of the proposed investmdent. (Euture Value of $1. PresentValue of $1. Euture Value Annuity of $1. Present Value Annuity of $1) (Use appropriate factor(s) from the tables provided. Negativeamount should be indicated by a minus sign. Enter the answer in whole dollars.)Net present value

All sorts of future cash flows in respect of adding interest on present value are known as future…

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 in million, and the equipment has a useful life of 5 vears with a residual value of $

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 in million, and the equipment has a useful life of 5 vears with a residual value of $

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Consider a project with the following information: Initial fixed asset investment = $550,000; straight-line depreciation to zero over the 4-year life; zero salvage value; price $54; variable costs = $35; fixed costs = $228,000, quantity sold = 116,000 units; tax rate = 23 percent. How sensitive is OCF to changes in quantity sold? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) AOCFIAQ 9.24
13. Ebasan Company acquired a heavy road transporter on January 1, 2015 at a cost of P10,000,000. The estimated useful life is 10 years. On January 1, 2021, the power train requires replacement, as further maintenance is uneconomical due to the off-road time required. The remainder of the vehicle is perfectly roadworthy and is expected to last for the next four years. The cost of the new power train is P4,500,000. Assuming that the original cost of the power train is P3,000,000, the total depreciation expense in 2021 is A. 2,200,000 B. 1,825,000 C. 1,150,000 D. 1,450,000 14. Assuming that the original cost of the power train is not separately identifiable and the appropriate discount rate is 5%, the total depreciation expense in 2021 is A. 1,000,000 B. 2,500,000 C. 2,934,362 D. 1,789,210
The company DstriBut.inc decides to take a technological shift by replacing its old distribution center with a new one that is more oriented towards technology and less dependent on manpower. The entire installation is estimated at $6,000,000 amortized at the rate of 30% decreasing. An immediate expense of $30,000 (taxable and non-depreciable) is planned to ensure the training of the personnel who will operate on the new installations. This investment creates a working capital requirement of $400,000, fully recoverable. The company estimates to increase its operating cash flow by $1,500,000 before tax. On the other hand, the company must assume an expense for the maintenance and replacement of consumable components of new installations in the amount of $50,000 every 2 years. This investment will have a residual value of $2,500,000 at the end of the investment horizon, which is set at 5 years by senior management. The tax rate is 40% and the rate of return required by senior management…
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