PhotoQuik is a film developing company. Customers mail their undeveloped rolls of film to the…

PhotoQuik is a film developing company. Customers mail their undeveloped rolls of film to the company and receive the completed photographs in return mail. The PhotoQuik facility is built and staffed to handle the processing of 100,000 rolls of film per year. The lab facility cost $330,000 to build and is expected to last 20 years. Processing equipment cost $592,500 and has a life expectancy of five years. Both facility and equipment are depreciated on a straight-line basis. PhotoQuik has five salaried processing technicians, each of whom is paid $15,000. In addition to the salaries, facility, and equipment, PhotoQuik expects to spend $400,000 for chemicals, photo paper, envelopes, and other supplies (assuming 100,000 rolls of film are processed). Last year, 96,000 rolls of film were processed.


1. Classify the resources associated with the film-processing activity into one of the following types: (1) committed resources and (2) flexible resources.

2. Calculate the total activity rate for the film-processing activity. Break the activity rate into fixed and variable components.

3. Compute the total activity availability, and break this into activity output and unused activity.

4. Calculate the total cost of resources supplied, and break this into the cost of activity used and the cost of unused activity.

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