Automatic versus Manual Processing

Bartell's, a Seattle area drug store, operates an in$-$store printing service for customers with digital cam$-$

eras. 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 desir$-$

ability 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.

Required

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

With the current employee$-$assisted process.

With the proposed customer self$-$service process.

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

than$)$ the current process.