Question: Problem 7.3 Question Help Borges Machine Shop, Inc., has a 1-year contract for the production of 75,000 gear housings for a new off-road vehicle. Owner

Problem 7.3 Question Help Borges Machine Shop,

Problem 7.3 Question Help 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 $150,000 $15.00 Flexible Manufacturing System (FMS) 75,000 $250,000 $14.75 Dedicated Machine (DM) 75,000 $500,000 $13.75 Based on the total cost, the process that is best suited for the current contracted volume is GPE FMS DM

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