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Automatic versus Manual Processing Bartell's, a Seattle area drug store, operates an in-store printing...

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Accounting

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 $0.15 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 $0.05 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.
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