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Thumbnail filesizes are bigger than original

Thumbnail filesizes are bigger than original

So we use PNG files on our online store for product images.  If I upload a 200Kb main image, once magento thumbnails the file, it can be up to 10x bigger in filesize.  Can someone tell me where the default Magento thumbnail fuction is defined?  Also how can I tell if the default is being called by the product page?