Question: Question 2. (20 marks) Meile Machine Shop, Inc., has a one-year contract for the production of 200 000 gear housings for a new off-road vehicle.

Question 2. (20 marks) Meile Machine Shop, Inc., has a one-year contract for the production of 200 000 gear housings for a new off-road vehicle. Owner Larry Meile hopes the contract will be extended and the volume increased next year. Meile 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 Equipment (GPE) $ Flexible Manufacturing Dedicated Machine System (FMS) S (DM) 200 000 200 000 200 000 Annual contracted units Annual fixed cost Per unit variable cost 100 000 15.00 200 000 14.00 500 000 13.00 Which process is best for this contract

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