Automatic versus Manual Processing

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 $$6,000$ plus $$0\mathrm{.}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\mathrm{.}04$ per photo.

$($a$)$ Determine the total costs of printing $20,000$ and $50,000$ photos per month.

$($b$)$ Determine the monthly volume at which the proposed process becomes preferable to $($cost less than$)$

the current process.

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