Question

Cambridge Business Putih cras . The current service , which requires employees to download photos from customer came Bartera Seattle area drugstore , operates an in - store printing service for customers with cena monthly operating costs of $ 5.500 plus SO . 15 per photo printed . Management is evaluating the deit ability of acquiring a machine that will allow customers to download and make prints without copy assistance . If the machine is acquired , the monthly fixed costs will increase to $ 7,000 and the varie b . Determine the monthly volume at which the automatic process becomes preferable to ( costos Assume the local YRC Worldwide delivery service hub has the following information available about Use the high - low method to develop a cost - estimating equation for Intel Module 15 cout Boot Activity Analysis and Cost Estimation eCarriên E15-20. LO2 ES16 Automate versus Manual Processing Bate costs of printing a photo will decline to $0.05 per photo Required 2. 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. b. Determine the monthly volume at which the proposed process becomes preferable to (costs les than the current process. LO2 E15-17. Automatic versus Manual Processing Assume Office Depot processes 2,500,000 photocopies per month at its service center. Approximatch 50% of the photocopies require collating. Collating is currently performed by high school and cal IBC lege students who are paid $10 per hour. Each student collates an average of 5,000 copies per how Management is contemplating the lease of an automatic collating machine that has a monthly capacity collated of 6,000,000 photocopies, with lease and operating costs totaling $3,000, plus $0.05 per 1,000 unis Depot ODP) Required a. Determine the total costs of collating 1,000,000 and 2,000,000 per month: 1. With student help 2 With the collating machine. ΕΙΣ than the manual process. LO3 E15-18. High-Low Cost Estimation orldwide fleet miles and operating costs: Year Yeart Year 2 Miles Operating costs $219,500 267,500 Required 695,000 855,000 (LUX) il riting COSS. LO3, 4 15-19. Scatter Diagrams and High-I.com Assume the local

Answer 1

Requirement (a):

with the current employee assisted process -

- Printing 10000 photos per month:

Variable costs = 10000*$0.15 = $1500

Fixed costs = $5500

Total Costs = $1500 + $5500 = $7000.

- Printing 25000 photos per month:

Variable costs = 25000*$0.15 = $3750

Fixed costs = $5000

Total costs = $3750 + $5500 = $9250.

With proposed customer self service process -

- Printing 10000 per month:

Variable costs = 10000*$0.05 = $500

Fixed costs = $7000

Total costs = $500 + $7000 = $7500

-Printing 25000 photos per month

Variable costs = 25000*0.05 = $1250

Fixed costs = $7000

Total costs = $1250 + $7000 = $8250.

Requirement (b):

The volume at which the total costs will be equal in both the circumstances is:

Volume = Difference in fixed costs / Difference in variable costs

Volume = (7000-5500) / (0.15-0.05)

Volume = 1500/0.1

Volume = 15000 units.

So, if the company produces more than 15000 units, then the proposed process will be preferable than the current process.