7.1 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: Annual contracted units Annual fixed cost Per unit variable cost GENERAL-PURPOSE . FLEXIBLE EQUIPMENT MANUFACTURING (GPE) SYSTEM (FMS) 200,000 200,000 $100,000 $ 15.00 $200,000 $ 14.00 DEDICATED MACHINE (DM) 200,000 $500,000 $ 13.00 Which process is best for this contract? PX 7.2 Using the data in Problem 7.1, determine the most economical volume for each process. PX . 7.3 Using the data in Problem 7.1, determine the best pro-cess for each of the following volumes: (1) 75,000, (2) 275,000, and (3) 375,000.