Automatic versus Manual Processing

A Seattle area drug store operates an in$-$store printing service for customers with digital cameras. The current service, which requires employees to download photos from customer cameras, has monthly operating costs of $$5,500$ plus $$0\mathrm{.}15$ 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 $$7,000$ and the variable costs of printing a photo will decline to $$0\mathrm{.}05$ per photo.

$($a$)$ Determine the total costs of printing $10,000$ and $25,000$ photos per month:

$1.$ With the current employee$-$assisted process.

$2.$ With the proposed customer self$-$service process.

UnitsCurrent ProcessProposed Process$10,000$Answer $1$

Answer $2$

$25,000$Answer $3$

Answer $4$

$$

$($b$)$ Determine the monthly volume at which the proposed process becomes preferable to $($costs less than$)$ the current process.

Answer $5$

units