I want answer for question No. 5 only, how to draw the graph.

CHAPTER 7 - TECHNICAL CASE Borges Machine Shop, Inc., has a 1-year contract for the production of 200,000 gear housing for a new off- road vehicle. Owner Luis Borges hopes the contract will be extended and the volume increase next year. Borges has developed costs for three alternatives - these are general-purpose equipment (GPE), flexible manufacturing system (FMS) and expensive but efficient dedicated machine (DM). The costs are as follows: GPE FMS DM ANNUAL CONTRACTED UNITS TO BE PRODUCED 200,000 200,000 200,000 ANNUAL FIXED COSTS $100,000 $200,000 $500,000 PER UNIT VARIABLE COSTS $15.00 $14.00 $13.00 [NOTICE: Units remain the same but fixed costs increase with the cost of the equipment but per unit costs decrease due to the increased efficiency of the equipment] As the consultant, you need to: 1. Determine the most economical volume for each process (the crossover polnts); 2. Determine which process to select for the contract identifled above (200,000 unlts); 3. Determine the best process for each of the following volumes to be produced: 1. 75,00 2. 275,000 3.375,000 4. If a contract for the second and third years Is pending, what the Implications for process selection? 5. Prepare a GRAPH showing the FIXED COSTS, TOTAL COSTS (VARIABLE COSTS X QUANTITIES), and CROSSOVER POINTS for each process and each volume. Write out your work for each, show the answer, and prepare a one-page summary that answers each of the questions. 1. Answer = 100,000 Is the most economical volume for GPE. 300,000 is the most economical volume for FMS. Above 300,000 units, DM would be the best process. Elaboration: Let demand = x For GPE Annual Fixed Cost = $100,000 Per unit variable cost = $15 Total cost = $100,000 + $15*X = 100,000 + 15x For FMS: Annual Fixed Cost = $200,000 Per unit variable cost = $14 Total cost = $200,000 + $14*X = 200,000 + 14x For DM: Annual Fixed Cost = $500,000 Per unit variable cost = $13 Total cost = $500,000 - $13*X 2. Answer = FMS Elaboration: Demand = 200,000 Total Cost for GPE = 100,000 + 15 * (200,000) = $310,0000 Total Cost for FMS = 200,000 + 14* (200,000) = $300,0000 Total Cost for DM = 500,000 + 13 * (200,000) = $310,0000 Hence, Total cost of EMS is the lowest, it should be selected. 3. Answer = 1. GPE 2. FMS 3. DM Elaboration: For Demand = 7500: Total Cost for GPE = 100,000 + 15* (7500) = $212,500 Total Cost for FMS = 200,000 + 14* (7500) = $305,000 = $4,050,000 Total Cost for DM = 500,000 + 13 * (275,000) = $4,075,000 Total cost of EMS is the lowest, hence it should be selected. For Demand = 375,000 Total Cost for GPE - 100,000 + 15* (375,000) = $5,725,000 Total Cost for FMS = 200,000 + 14* (375,000) = $5,450,000 Total Cost for DM = 500,000 + 13 * (375,000) = $5,375,000 Total cost of DM is the lowest, hence it should be selected. 4. Answer = If their contracts are pending its better to choose FMS as if the contracted units of these processes are less than 300,000 but more than 100,000, choosing DM or GPE would be expensive