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please help The Xerox Docucolor iGen3 digital production press is a high volume, on demand, full color printer capable of producing up to 6,000 impressions
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The Xerox Docucolor iGen3 digital production press is a high volume, on demand, full color printer capable of producing up to 6,000 impressions per hour. It weighs nearly 3 tons, stretches 30 feet long, and holds more than 40 pounds of dry ink. It sells for over K500, 000,000 and its principal market is print shops that produce mail order catalogs. Xerox offers two leasing options for the iGen3.Option A requires a three-year agreement with a monthly lease fee of K10, 000,000 plus K10 per impression. Option B, also a three year agreement, does not include a monthly lease fee but requires a charge of K 35 per impression. ColorGrafix is a print shop considering leasing the iGen3 to begin producing customized mail-order catalogs. Besides leasing the iGen3, ColorGrafix estimates that it will have to buy ink for the iGen3 at a cost of K20 per impression and hire an operator to run the iGen3 to produce the customized catalogs at a cost of K5,000,000 per month.ColorGrafix estimates that it can charge K80 per impression for customized color catalogs. REQUIRED: (a) If ColorGrafix leases the iGen3 and chooses Option A, how many impressions per month will ColorGrafix have to sell and produce to break even? (3 Marks) (b) If ColorGrafix leases the iGen3 and chooses Option B, how many impressions per month will ColorGrafix have to sell and produce to break even? (3 Marks) (c) Should ColorGrafix choose option A or option B? Explain Why? (2 Marks) (d) Calculate the Profit Volume ratio for Option A and Option B. (4 Marks) (e) If ColorGrafix expects to sell and produce 520,000 impressions per month, find the margin of safety for each option. (2 Marks) (f) Find the number of impressions at which both option A and option B are equally profitable (6 Marks) (g) If ColorGrafix expects to sell and produce 520,000 impressions per month, which option should colourgrafix choose?Why? show calculations. (5 marks)(Total 25 Marks) Step by Step Solution
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