Drawing on your knowledge of the theory of demand and supply supplemented by appropriate media reports
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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) 200,000 200,000 Annual contracted units Annual fixed cost $100,000 $225,000 Per unit variable cost $18.00 $14.00 The option GPE is best when the contracted volume is below 31250 units (enter your response as a whole number). 200,000 $480,000 $13.00 General-Purpose Equipment (GPE) Annual contracted units Annual fixed cost Per unit variable cost Flexible Manufacturing System (FMS) Dedicated Machine (DM) 200,000 200,000 $225,000 $100,000 $18.00 $14.00 The option GPE is best when the contracted volume is below 31250 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). 200,000 $480,000 $13.00 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) 200,000 200,000 Annual contracted units Annual fixed cost $100,000 $225,000 Per unit variable cost $18.00 $14.00 The option GPE is best when the contracted volume is below 31250 units (enter your response as a whole number). 200,000 $480,000 $13.00 General-Purpose Equipment (GPE) Annual contracted units Annual fixed cost Per unit variable cost Flexible Manufacturing System (FMS) Dedicated Machine (DM) 200,000 200,000 $225,000 $100,000 $18.00 $14.00 The option GPE is best when the contracted volume is below 31250 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). 200,000 $480,000 $13.00
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Survey of Accounting
ISBN: 978-0078110856
3rd Edition
Authors: Thomas P. Edmonds, Frances M. McNair, Philip R. Olds, Bor-Yi
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