Required Information Pa11 2 Algo Making Automation Decision Lo 11 1 11 2 11 3 11 5 The Following Information A 1 (34.18 KiB) Viewed 41 times
Required Information Pa11 2 Algo Making Automation Decision Lo 11 1 11 2 11 3 11 5 The Following Information A 2 (36.07 KiB) Viewed 41 times
! 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 $10.36 million, and the equipment has a useful life of 8 years with a residual value of $1,080,000. The company will use straight- line depreciation. Beacon could expect a production increase of 49,000 units per year and a reduction of 20 percent in the labor cost per unit Current (no Proposed automation) (automation) 76,000 unita 135,000 units Per Per Production and sales volume Unit Unit Total Sales revenue S? $99 Variable conta Direct materiale 312 Direct labor 30 Variable manufacturing overhead 11 Total variable manufacturing conta 30 Contribution margin 5.41 5.47 Fixed manufacturing coats 5 1 120.000 $ 2,270,000 Not operating income Total 2 ces 2 2 2 PA11-2 Part 1
Required information Required: 1-a. Complete the following table showing the totals (Enter your answers in whole dollars, not in millions.) Current (no automation) 76,000 units Per Unit Total $ 99 Proposed (automation) 125,000 units Per Unit Total $ 99 $ $ 17 17 30 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 11 11 58 $ 41 $ 47 $ 1.120,000 $ 2,270,000 1-b. Does Beacon Company favor automation? Yes No
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