Question: Q31 Borges Machine Shop, Inc., has a 1-year contract for the production of 250,000 gear housings for a new off-road vehicle. Owner Luis Borges hopes

Q31 Q31 Borges Machine Shop, Inc., has a 1-year

Borges Machine Shop, Inc., has a 1-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 (DM). The cost data follow: Annual contracted units Annual fixed cost Per unit variable cost General-Purpose Equipment (GPE) 250,000 $100,000 $18.00 Flexible Manufacturing System (FMS) 250,000 $250,000 $14.75 Dedicated Machine (DM) 250.000 $480.000 $13.00 Based on the cost, the process that is best suited for the current contracted volume is

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