Case 2-60 Part 1 1. FastQ Company, a specialist in printing, has established 500 convenience copying centers throughout the country. In order to upgrade its services, the company is considering three new models of laser copying machines for use in producing high-quality copies. These high-quality copies would be added to the growing list of products offered in the FastQ shops. The selling price to the customer for each laser copy would be the same, no matter which machine is installed in the shop. The three models of laser copying machines under consideration are 1024S, a small-volume model; 1024M, a medium-volume model; and 1024G, a large-volume model. The annual rental costs and the operating costs vary with the size of each machine. The machine capacities and costs are as follows: Copier Model Annual capacity (copies) Costs: Annual machine rental 10245 100,000 1024M 350,000 1024G 800,000 Direct material and direct labor Variable overhead costs $ 7,000 0.02 0.12 $ 11,000 0.02 0.07 $ 20,000 0.02 0.03 a. Calculate the volume level in copies where FastQ Company would be indifferent to acquiring either the small-volume model laser copier, 1024S, or the medium-volume model laser copier, 1024M. b. The management of FastQ Company is able to estimate the number of copies to be sold at each establishment. Present a decision rule that would enable FastQ Company to select the most profitable machine without having to make a separate cost calculation for each establishment. (Hint: To specify a decision rule, determine the volume at which FastQ would be indifferent between the small and medium copiers. Then determine the volume at which FastQ would be indifferent between the medium and large copiers.) Complete this question by entering your answers in the tabs below. Required 1A Required 1B Calculate the volume level in copies where FastQ Company would be indifferent to acquiring either the small-volume model laser copier, 1024S, or the medium-volume model laser copier, 1024M. Volume level copies Required 1A Required 1B The management of FastQ Company is able to estimate the number of copies to be sold at each establishment. Present a decision rule that would enable FastQ Company to select the most profitable machine without having to make a separate cost calculation for each establishment. (Hint: To specify a decision rule, determine the volume at which FastQ would be indifferent between the small and medium copiers. Then determine the volume at which FastQ would be indifferent between the medium and large copiers.) At least 1 Anticipated Annual Volume But not more than Optimal Model Choice Show less 800,000