Question: Borges Machine Shop, Inc., has a 1-year contract for the production of 75,000 gear housing for a new off-road vehicle. Owner Luis Borges hopes the

Borges Machine Shop, Inc., has a 1-year contract for the production of 75,000 gear housing for a new off-road vehicle. Owner Luis Borges hopes the contract will be a 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 75,000 $150,000 $15.00 Annual contracted units Annual fixed cost Per unit variable cost Flexible Manufacturing System (FMS) 75,000 $250,000 $14.00 Dedicated Machine (DM) 75,000 $480,000 $13.75 Based on the total cost, the process that is best suited for the current contracted volume is GPE Suppose the contracted volume changes to 275,000 gear housings. Based on the total con, the process that is best suited for the new volume is

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