Question

Borges Machine​ Shop, Inc., has a​ 1-year contract for the production of

250,000

gear housings for a new​ off-road vehicle. Owner Luis Borges hopes the contract will be extended and the volume increased next year. Borges has developed costs for three alternatives. They are​ general-purpose equipment​ (GPE), flexible manufacturing system​ (FMS), and​ expensive, but​ efficient, dedicated machine​ (DM). The cost data​ follow:

                                                                                                                                            

	​General-Purpose Equipment​ (GPE)	Flexible Manufacturing System​ (FMS)	Dedicated Machine​ (DM)
Annual contracted units	250,000	250,000	250,000
Annual fixed cost	$125,000	$250,000	$525,000
Per unit variable cost	$15.00	$14.00	$13.00

The option GPE is best when the contracted volume is below

nothing

units ​(enter your response as a whole​ number).

Answer 1

1:- go Answer: Total cost(e) – fixed cost +(volumex variable cast finit, Let us take, volume us. TCape = $125,000 +152 TCFMS = f250,000 +146 TCDM = $525,000+ 134 TCGPE = TCFms 125,000 +15%= 250000+147 125,000-250,000 = -158 +148 X = 125,000 SO The option GPE is best between the contracted volume is below, 125,000 units