At the BlueFin Bank corporate headquarters, management was discussing the potential of outsourcing the processing of credit card transactions to DataEase, an international provider of banking operational services. Processing of the transactions at BlueFin has been a costly element of the annual profit and loss statement and the continual investment in equipment to keep up to date has been draining capital reserves. Based upon initial study and negotiations, DataEase will charge $0.02 more per transaction than BlueFin's cost per transaction, and DataEase will want $7 million per year to cover equipment and overhead costs associated with the contract. BlueFin has yet to develop an estimate for the annual overhead and fixed costs associated with processing the transactions. These costs include supervision, administrative support, maintenance, equipment depreciation, and overhead. If BlueFin must process 23 million transactions per year, how high must those fixed costs be before it would pay to use DataEase? The fixed costs must be higher than $ (Enter your response as an integer.)
At the BlueFin Bank corporate headquarters, management was discussing the potential of outsourcing the processing of credit card transactions to DataEase, an international provider of banking operational services. Processing of the transactions at BlueFin has been a costly element of the annual profit and loss statement and the continual investment in equipment to keep up to date has been draining capital reserves. Based upon initial study and negotiations, DataEase will charge $0.02 more per transaction than BlueFin's cost per transaction, and DataEase will want $7 million per year to cover equipment and overhead costs associated with the contract. BlueFin has yet to develop an estimate for the annual overhead and fixed costs associated with processing the transactions. These costs include supervision, administrative support, maintenance, equipment depreciation, and overhead. If BlueFin must process 23 million transactions per year, how high must those fixed costs be before it would pay to use DataEase? The fixed costs must be higher than $ (Enter your response as an integer.)
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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Transcribed Image Text:At the BlueFin Bank corporate headquarters, management was discussing the potential of outsourcing the processing
of credit card transactions to DataEase, an international provider of banking operational services. Processing of the
transactions at BlueFin has been a costly element of the annual profit and loss statement and the continual
investment in equipment to keep up to date has been draining capital reserves.
Based upon initial study and negotiations, DataEase will charge $0.02 more per transaction than BlueFin's cost
per transaction, and DataEase will want $7 million per year to cover equipment and overhead costs associated with
the contract. BlueFin has yet to develop an estimate for the annual overhead and fixed costs associated with
processing the transactions. These costs include supervision, administrative support, maintenance,
equipment depreciation, and overhead.
If BlueFin must process 23 million transactions per year, how high must those fixed costs be before it would pay to
use DataEase?
The fixed costs must be higher than $. (Enter your response as an integer.)
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