Borges Machine Shop, lnc, has a I-year contract for the production of 250 000 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 (0M). The cost data follow General-Purpose Flexible Manufacturing Equipment (GPE) Annual contracted units Annual fixed cost Per unit variable cost If the contract for the second and third years is pending, for demand below 12,500 units, option For demand above 325,000 units, option is the best alternative for Luis. 250,000 $150,000 S18.oo System (FMS) 260,000 S200,ooo 51400 4, Dedicated Machine (0M) 260,000 S525,ooo $13.00 is the best alternative for Luis.