Question: Borges Machine Shop, Inc., has a 1 - year contract for the production of 2 5 0 comma 0 0 0 gear housings for a

Borges Machine Shop, Inc., has a1-year contract for the production of 250 comma 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
250 comma 000
250 comma 000
250 comma 000
Annual fixed cost
$ 125 comma 000
$ 200 comma 000
$ 500 comma 000
Per unit variable cost
$ 15.00
$ 14.00
$ 13.00
Part 2
The option GPE is best when the contracted volume is below
75,000 units (enter your response as a whole number).
Part 3
The option FMS is best when the contracted volume is between
75000 and
750000 units (enter your responses as whole numbers).

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