The Print Shop provides copying services to the general public. The Print Shop has equipment which is capable of making 1,800 copies per hour. The practical capacity of the equipment is 7 hours per day due to set up time and time to re-supply paper and toner. Customers expect quick service. If copies cannot be made within an hour, the customer will take their job elsewhere. The Print Shop has an excellent location and as such the business has a fairly steady demand of 10,000 copies per day. The shop charges 25 cents a copy and has a total variable cost of 22 cents per copy. Required: (a) At 8 a.m. one morning a customer brings in 5,000 pages to be copied. The customer has requested that the copies be available by closing time. For this one-time order, the customer will only pay 24 cents per copy. Prepare a financial analysis to determine whether the order should be accepted. (b) Calculate the largest order from this customer that the shop could accept at 24 cents per copy and still earn a normal day’s incom
The Print Shop provides copying services to the general public. The Print Shop has equipment
which is capable of making 1,800 copies per hour. The practical capacity of the equipment is
7 hours per day due to set up time and time to re-supply paper and toner.
Customers expect quick service. If copies cannot be made within an hour, the customer will
take their job elsewhere. The Print Shop has an excellent location and as such the business has
a fairly steady demand of 10,000 copies per day. The shop charges 25 cents a copy and has a
total variable cost of 22 cents per copy.
Required:
(a) At 8 a.m. one morning a customer brings in 5,000 pages to be copied. The customer has
requested that the copies be available by closing time. For this one-time order, the customer
will only pay 24 cents per copy. Prepare a financial analysis to determine whether the order
should be accepted.
(b) Calculate the largest order from this customer that the shop could accept at 24 cents per
copy and still earn a normal day’s income.
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