[10 points] ND Photography is photographer for private events. The owner/ photographer has
expanded the business such that he does not have time to edit and re-touch the photos himself.
He is considering of hiring an employee to edit the photos versus outsourcing the editing. If an
employee is hired, the estimated fixed cost is $25,000 per year and the estimated variable cost of
in-house photo editing is $0.30 per each photo. If the photo editing is outsourced, ND
photography has to pay $1.00 per each retouched/ edited photo. ND photography needs to edit
50,000 photos, on average, per year. Should ND Photography outsource the photo editing? Show
calculation. Explain your reasoning. (Hint: Use break-even analysis).
