Fast Food Terminals II Taco Casa is considering installing touch screen terminals for patrons to place their food orders. A terminal can typically accommodate the placement of 15 orders each hour while a human can process 20 orders each hour. If employee costs are $7.50/hour in wages and $4.50/hour in taxes, benefits and insurance, what is the per order opportunity cost of a touch screen?
An employee has a per hour total compensation cost of $12.00 and can process 20 orders for $0.60 per order. But it only takes 4/3 touch screens to replace an employee (=20/15) making the opportunity cost per order $0.80 for the touch screen terminal.
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