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. current (no autonation) 1,000 units Proposed (automation) 116,000 units Per Unit Per Production and sales volune Sales revenue Variable costa birect materials Direct labor Variable manufacturing overhead Total variable manufacturing Unit Total $7 Total $ 95 $ 95 $17 20 $ 17 12 12 49 costs Contribution margin Fixed manutacturing costs $ 46 $ 50 $ 1,210,000 $2,270,000 Net operating income

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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.
current (no
autonation)
81,000 units
Per
Unit
Proposed
(automation)
116,000 unita
Per
Production and sales volume
Sales revenue
Variable coste
birect materials
Direct labor
Variable manufacturing overhead
Total variable manufacturing
Total
Unit
Total
$ 95
$ 95
$ 17
20
$ 17
12
12
costs
49
Contribution margin
rixed manufacturing costs
$ 46
$ 50
S1,210,000
5.2,270,000
Net operating income
PA11-2 Part 1
Transcribed Image Text: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. current (no autonation) 81,000 units Per Unit Proposed (automation) 116,000 unita Per Production and sales volume Sales revenue Variable coste birect materials Direct labor Variable manufacturing overhead Total variable manufacturing Total Unit Total $ 95 $ 95 $ 17 20 $ 17 12 12 costs 49 Contribution margin rixed manufacturing costs $ 46 $ 50 S1,210,000 5.2,270,000 Net operating income PA11-2 Part 1
Required information
Requireu.
1-a. Complete the following table showing the totals. (Enter your answers in whole dollars, not in
Current (no automation)
Proposed (automation)
81,000 units
116,000 units
Production and Sales Volume
Per Unit
Total
Per Unit
Total
Sales revenue
$
95
$
95
Variable costs
Direct materials
$
17
$
17
Direct labor
20
Variable manufacturing overhead
12
12
Total variable manufacturing costs
Contribution margin
49
2$
46
50
$ 2,270,000
Fixed manufacturing costs
Net operating income
1,210,000
1-b. Does Beacon Company favor automation?
O Yes
O No
%24
Transcribed Image Text:Required information Requireu. 1-a. Complete the following table showing the totals. (Enter your answers in whole dollars, not in Current (no automation) Proposed (automation) 81,000 units 116,000 units Production and Sales Volume Per Unit Total Per Unit Total Sales revenue $ 95 $ 95 Variable costs Direct materials $ 17 $ 17 Direct labor 20 Variable manufacturing overhead 12 12 Total variable manufacturing costs Contribution margin 49 2$ 46 50 $ 2,270,000 Fixed manufacturing costs Net operating income 1,210,000 1-b. Does Beacon Company favor automation? O Yes O No %24
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