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Borges Machine? Shop, Inc., has a? 1-year contract for the production of 200,000 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 |
200,000 |
200,000 |
200,000 |
|
Annual fixed cost |
$125,000 |
$225,000 |
$480,000 |
|
Per unit variable cost |
$16.00 |
$14.00 |
$13.00 |
The option GPE is best when the contracted volume is below ____ units (enter your response as a whole number)
The option FMS is best when the contracted volume is between ______ and _____ units (enter your response as a whole number)
The option DM is best when the contracted volume is over ____ units (enter your response as a whole number)
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