Red Star Copy Service processes 2,100,000 photocopies per month at its service center. Approximately 50 percent of the photocopies require collating. Collating is currently performed by high school and college students who are paid $9 per hour. Each student collates an average of 5,000 copies per hour. Management is contemplating the lease of an automatic collating machine that has a monthly capacity of 6,000,000 photocopies, with lease and operating costs totaling $1,550, plus $0.05 per 1,000 units collated.Required:a. Determine the total costs of collating 500,000 and 1,700,000 per month:1. With student help.2. With the collating machine.b. Determine the monthly volume at which the automatic process becomes preferable to the manual process.

total cost of collating 500,000 units = $1,550 + (500,000 / 1,000) x $0.05 = $1,575
total cost of collating 1,700,000 units = $1,550 + (1,700,000 / 1,000) x $0.05 = $1,635

b. Determine the monthly volume at which the automatic process becomes preferable to the manual process.

(x / 5,000) x $9 = $1,550 + [(x / 1,000) x $0.05]

x ($9/5,000) - x($0.05/1,000) = $1,550

$0.0018x - $0.00005x = $1,550

$0.00175x = $1,550

x = $1,550 / $0.00175 = 885,714.3 or 885,715 units

cost using student help = (885,715/5,000) x $9 = $1,594.29

cost of using collating machine = $1,550 + [(885,715 / 1,000) x $0.05] = $1,594.28

avalonnichole avalonnichole · Answer 2 · 2021-09-12T22:18:52+02:00

Answer:

a) determine the total costs of collating 500,000 and 1,700,000 per month

1. with student help

500,000 $900

1,700,000 $3,060

2. With the collating machine

500,000 $1,575

1,700,000 $3,060

Explanation:

500,000 copies/ 5,000 copies 1 student can accomplish per hour= 100 students to do the job

100 students times $9/hr =900

1,700,000/5,000 copies 1 student can do per hour = 340

340 students times $9=3,060

500,000/ 1,000 units= 500

500 times $.05= 25

$1,550+$25= $1,575

1,700,000/1,000=1,700

1,700 times $.05= $85

$1,550 + $85= $1635