A news clipping service is considering modernization. Rather than manually clipping and photocopy-ing articles of interest and mailing them to its clients, employees electronically input stories from the most widely circulated publications into a database. Each new issue is searched for keywords, such as a client’s company name, competitors’ names, type of business, and the company’s products, services, and officers. When matches occur, affected clients are instantly notified via an online network. If the story is of interest, it is electronically transmitted. Hence, the client often has the story and can prepare comments for follow-up inter-views before the publication hits the street. The manual process has fixed costs of $400,000 per year and variable costs of $6.20 per clipping mailed. The price charged to the client is $8.00 per clipping. The computerized process has fixed costs of $1,300,000 per year and variable costs of $2.25 per story electronically transmitted to the client.
A. If the same price is charged for either process, what is the annual volume beyond which the automated process is more attractive?