Question #1

Question #2

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: General-Purpose Flexible Manufacturing Dedicated Equipment (GPE) System (FMS) Machine (DM) Annual contracted units 250,000 250,000 250,000 Annual fixed cost $125,000 $200,000 $480,000 Per unit variable cost $15.00 $14.00 $13.50 Based on the cost, the process that is best suited for the current contracted volume is 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 $150,000 $15.00 Flexible Manufacturing System (FMS) 250,000 $200,000 $14.00 Dedicated Machine (DM) 250,000 $480,000 $13.00 The option GPE is best when the contracted volume is below units (enter your response as a whole number). The option FMS is best when the contracted volume is between and units (enter your responses as whole numbers). The option DM is best when the contracted volume is over units (enter your response as a whole number)