Question: Problem 1: Wally's Machine Shop has a contract for 130,000 units of a new product. Wally, the owner, has calculated the cost for three process

Problem 1:

Wally's Machine Shop has a contract for 130,000 units of a new product. Wally, the owner, has calculated the cost for three process alternatives. Fixed costs will be: for general-purpose equipment (GPE), $150,000; flexible manufacturing (FMS), $350,000; and dedicated automation (DA), $950,000. Variable costs will be: GPE, $10; FMS, $8; and DA, $6. Calculate the cost for each process. Which should he choose?

b. Which process should be chosen if they can make 400,000 units? Solve the problem for the crossover points.

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