Red star copy service processes 2,100,000 photocopies per month at its service center. Approximately 50 percent of the copies require collating. Collating is currently performed by college students at 9.00/hour. Each student collates 5000 copies per hour. Management is contemplating the lease of an automated collating machine that has a monthly capacity of 6,000,000 copies with a lease and operating cost totaling 1550.00 plus $0.05 per 1000 units.
Determine the cost of collating 500,000 and 1,700,000 per month:
With student help
With automated collating machine
Determine the monthly volume at which the automatic process becomes preferable to the manual process.