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 $0.20 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.
(a) Determine the total costs of printing 20,000 and 50,000 photos per month.
Units Current Process Proposed Process
| 20,000 |
$Answer |
$Answer |
| 50,000 |
$Answer |
$Answer |
(b) Determine the monthly volume at which the proposed process becomes preferable to the current process.