Automatic versus Manual Processing Image Solutions 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

\($7,000\) plus \($0.3\) 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 \($13,000\) and the variable costs of printing a photo will decline to \($0.05\) per photo.

Required

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

1. With the current employee-assisted process.

2. With the proposed customer self-service process.

b. Determine the monthly volume at which the proposed process becomes preferable to the current process.