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

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

Excel Applications for Accounting Principles

4th Edition

ISBN:9781111581565

Author:Gaylord N. Smith

Publisher:Gaylord N. Smith

Chapter26: Capital Budgeting (capbud)

Section: Chapter Questions

Problem 5R

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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 $6.78 million, 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 in the labor cost per unit. Current (no Automation) 83,000 units Per Unit $ 94 Proposed (automation) 131,000 unita Per Production and sales volume Sales revenue Total Unit $94 Total $ 2 Variable costs Direct materials Direct labor Variable manufacturing overhead Total variable manufacturing $ 18 $18 25 10 10 53 costs Contribution nargin Fixed manufacturing conts $ 41 $ 46 7. $ 1,160,000 $2,330,000 Net operating income PA11-2 Part 2 2. Determine the project's accounting rate of…
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 $7.52 million, and the equipment has a useful life of 6 years with a residual value of $1,100,000. The company will use straight- line depreciation. Beacon could expect a production increase of 47,000 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 Current (no automation) 81,000 Proposed (automation) 128,000 units units Net present value Per Unit $94 $17 30 9 56 $38 Total $ ? ? 1,240,000 ? Per Unit $94 $17 P 9 ? $44 Total $ ? ? 2,200,000 Required: 4. Using a discount rate of 14 percent, calculate the net present value (NPV) of the proposed…
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 $7.52 million, and the equipment has a useful life of 6 years with a residual value of $1,100,000. The company will use straight- line depreciation. Beacon could expect a production increase of 47,000 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 Current (no automation) 81,000 Proposed (automation) 128,000 units units Net present value Per Unit $94 $ 17 30 9 56 $ 38 Total $ ? ? 1,240,000 ? Per Unit $94 $ 17 ? 9 ? $44 Total $? ? 2,200,000 ? Required: 5. Recalculate the NPV using a 9 percent discount rate. (Future Value of $1. Present Value of…
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 $10.31 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 43,000 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 Current (no automation) 82,000 units Proposed (automation) 125,000 units Per Unit Per Total Unit Total $ 96 $ ? $ 96 $ ? $ 16 $ 16 15 ? 9 9 Total variable manufacturing costs 40 Contribution margin $ 56 49 ? ? $ 59 ? Fixed manufacturing costs $ 1,240,000 $ 2,330,000 Net operating income. ? ? 3. Determine the project's payback period. (Round your answer to 2 decimal places.) Payback period years
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 $9.32 million, and the equipment has a useful life of 8 years with a residual value of $1,160,000. The company will use straight- line depreciation. Beacon could expect a production increase of 37,000 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 Required: 1-6. Complete the following table showing the totals. 1-b. Does Beacon Company favor automation? Current (no automation) 88,000 Proposed (automation) 125,000 units units Per Unit $ 100 $.16 25 19 50 $.50 Complete this question by entering your answers in the tabs below. Total $7 ? 1,160,000 ?…
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 $11.45 million, and the equipment has a useful life of 9 years with a residual value of $1,100,000. The company will use straight- line depreciation. Beacon could expect a production increase of 46,000 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 Current (no automation) 87,000 units years Per Unit $92 $19 25 9 53 $39 Total $ ? ? $ 1,100,000 ? Proposed (automation) 133,000 units Per Unit $92 $19 ? 9 ? $44 Total $ ? 3. Determine the project's payback period. (Round your answer to 2 decimal places.) ? $ 2,330,000 ?
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 $11.45 million, and the equipment has a useful life of 9 years with a residual value of $1,100,000. The company will use straight- line depreciation. Beacon could expect a production increase of 46,000 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 Current (no automation) 87,000 units Net present value Per Unit $92 $19 25 9 53 $39 Total $ ? ? $ 1,100,000 ? Proposed (automation) 133,000 units Per Unit $92 $19 ? 9 ? $44 Total $ ? ? $ 2,330,000 ? 5. Recalculate the NPV using a 8 percent discount rate. (Future Value of $1, Present Value of $1,…
(Related to Checkpoint 13.4) (Break-even analysis) The Marvel Mfg. Company is considering whether or not to construct a new robotic production facility. The cost of this new facility is $624,000 and it is expected to have a six-year life with annual depreciation expense of $104,000 and no salvage value. Annual sales from the new facility are expected to be 2,010 units with price of $1,000 per unit. Variable production costs are $610 per unit, and fixed cash expenses are $76,000 per year. a. Find the accounting and the cash break-even units of production. b. Will the plant make a profit based on its current expected level of operations? c. Will the plant contribute cash flow to the firm at the expected level of operations?
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 $6.20 million, and the equipment has a useful life of 5 years with a residual value of $1,100,000. The company will use straight- line depreciation. Beacon could expect a production increase of 31,000 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 Current (no automation) 88,000 units Net present value Per Unit $93 $16 12124 25 52 $ 41 Total $7 7 1,090,000 2 Proposed (automation) 119,000 units Per Unit $93 $ 16 7 11 ? $46 Total $7 7 2,280,000 2 Required: 5. Recalculate the NPV using a 9 percent discount rate. (Future Value of $1. Present Value of…
Beacon Company is considering automating its production facility. The initial investment in automation would be $9.15 million, and the equipment has a useful life of 7 years with a residual value of $1,100,000. 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 automation) Proposed (automation) 77,000 units126,000 units Production and sales volumePer UnitTotalPer UnitTotal Sales revenue$97$ ?$97$? Variable costs Direct materials$15 $15 Direct labor 20? Variable manufacturing overhead 10 10 Total variable manufacturing costs 45 ? Contribution margin$52?$56? Fixed manufacturing costs $ 1,130,000 $2,230,000 Net operating income ?? 3. Determine the project's payback period. (Round your answer to 2 decimal places.)
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6. 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 $12.39 million, and the equipment has a useful life of 10 years with a residual value of $1,090,000. The company will use straight-line depreciation. Beacon could expect a production increase of 34,000 units per year and a reduction of 20 percent in the labor cost per unit. Current (no automation) 75,000 units Current (no automation) 75,000 units Proposed (automation) 109,000 units Proposed (automation) 109,000 units Production and sales volume Per Unit Total Per Unit Total Sales revenue $92 $ ? $ 92 $? Variable costs Direct materials $17 $17 Direct labor 20 ? Variable manufacturing overhead 12 12 Total variable manufacturing costs 49 ? Contribution margin…