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) Annual contracted units 200,000 200,000 200,000 Annual fixed cost $125,000 $225,000 $500,000 Per unit variable cost $18.00 $14.50 $13.50 Based on the cost, the process that is best suited for the current contracted volume is DM FMS GPE .