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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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