question archive CopyFast Company, a specialist in printing, has established 500 convenience photo copying centers throughout the country
CopyFast Company, a specialist in printing, has established 500 convenience photo copying centers throughout the country
Subject:AccountingPrice: Bought3
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CopyFast Company, a specialist in printing, has established 500 convenience photo copying centers throughout the country. In order to upgrade its services, the company is considering three new models of laser copying machines for use in producing high-quality copies. These high-quality copies would be added to the growing list of products offered in the CopyFast shops. The selling price to the customer for each laser copy would be the same, no matter which machine is installed in the shop. The three models of laser copying machines under consideration are: 1500S, a small-volume model; 1500M, a medium-volume model; and 1500L, a large-volume model. The annual rental costs and the operating costs vary with the size of each machine. The machine capacities and costs are as follows: |
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Photocopier Model |
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| 1500S | 1500M | 1500L | ||||
| Annual capacity (copies) | 100,000 | 350,000 | 800,000 | |||
| Costs: | ||||||
| Annual machine rental | $ | 10,000 | $ | 11,000 | $ | 21,000 |
| Direct material and direct labor cost per copy | 0.02 | 0.02 | 0.02 | |||
| Variable overhead costs per copy | 0.12 | 0.07 | 0.03 | |||
| a. |
Calculate the volume level in copies where CopyFast Company would be indifferent to acquiring either the small-volume model laser copier, 1500S, or the medium-volume model laser copier, 1500M. |
