Automatic versus Manual Processing (LO2) Photo Station Company operates a printing service for customers with digital cameras.
Question:
Automatic versus Manual Processing (LO2)
Photo Station Company operates a printing service for customers with digital cameras. The current service, which requires employees to download photos from customer cameras, has monthly operating costs of $5,000 plus $0.20 per photo printed. Management is evaluating the desirability of acquiring a machine that will allow customers to download and make prints without employee assistance. If the machine is acquired, the monthly fixed costs will increase to $10,000 and the variable costs of printing a photo will decline to $0.04 per photo.
Required
a. Determine the total costs of printing 20,000 and 50,000 photos per month:
1.With the current employee-assisted process.
2.With the proposed customer self-service process.
b. Determine the monthly volume at which the proposed process becomes preferable to the current process. (p. 63)
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