Borges Machine Shop, Inc., has a 1-year contract for the production of 75,000 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 Equipment (GPE) 75,000 $100,000 $16.00 Flexible Manufacturing System (FMS) 75,000 $225,000 $14.50 Dedicated Machine (DM) 75,000 $525,000 $13.50 Compare the three alternative processes with a crossover chart, which is a chart of costs at the possible volumes for more than one process. To solve for the crossover point for GPE and FMS, set the cost of GPE equal to the cost of FMS. V1 is the unknown volume. = $125,000 + ($16.00)V1 = $200,000 + ($14.75)V1 $1.25V1 = $75,000 V1 = 60,000 (enter your response as a whole number). = To solve for the crossover point for FMS and DM, set the cost of FMS equal to the cost of DM. V2 is the unknown volume. = $200,000 + ($14.75)V2 = $500,000 + ($13.00)V2 $1.75V2 = $300,000 V2 = = 171,429 (enter your response as a whole number). = To solve for the crossover point for GPE and DM, set the cost of GPE equal to the cost of DM. V3 is the unknown volume. = $125,000 + ($16.00)V3 = $500,000 + ($13.00)V3 $3.00V3 = $375,000 V3 = 125,000 (enter your response as a whole number). = = The crossover chart for the three alternative processes is shown on the graph to the right. GPE DM FMS I I V1 V3 V2 Thus, GPE is most economical for the volumes between 0 and 60,000 (V1). FMS is most economical for the volumes between 60,000 (V1) and 171,429 (V2). DM is most economical if the volume exceeds 171,429 (V2). Based on the total cost, the process that is best suited for the current contracted volume of 75,000 gear housings is FMS. Suppose the contracted volume changes to 275,000 gear housings. Based on the total cost, the process that is best suited for the new volume is DM. Suppose the contracted volume changes to 375,000 gear housings. Based on the total cost, the process that is best suited for the new volume is