CopyFast Company, a specialist in printing, has established 500 convenience photo 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 CopyFast 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: 1500S, a small-volume model; 1500M, a medium-volume model; and 1500L, 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:

Photocopier Model

1500S

1500M

1500L

Annual capacity (copies)

100,000

350,000

800,000

Costs:

Annual machine rental

$

10,000

$

11,000

$

21,000

Direct material and direct labor cost per copy

0.02

0.02

0.02

Variable overhead costs per copy

0.12

0.07

0.03

b.	Present a decision rule that would enable management to select the most profitable machine. (Hint: For your calculations compare 1500S to 1500M and 1500M to 1500L.)
	Anticipated Annual Volume? Optimal Model Choice 0- 20,000 ? 20,000- 250,000 ? 250,000 and higher ?