Question

Borges Machine Shop, Inc., has a 1-year contract for the production of 225 000 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 225 000 225 000 225000 Annual fixed cost $ 125000 $ 250 000 $ 500 000 Per unit variable cost $ 16.00 $ 14.00 $ 13.00

The option GPE is best when the contracted volume is below nothing units (enter your response as a whole number).

The option FMS is best when the contracted volume is between and units (enter your responses as whole numbers).

The option DM is best when the contracted volume is over nothingunits (enter your response as a whole number).

Answer 1