Question: VICKY NAGAR - DO NOT ANSWER THIS QUESTION. YOU ANSWERED IT WRONG TWICE. Problem 7:1 Tanners Machine Shop, Inc., has a 1-year contract for the
VICKY NAGAR - DO NOT ANSWER THIS QUESTION. YOU ANSWERED IT WRONG TWICE.
Problem 7:1
Tanners Machine Shop, Inc., has a 1-year contract for the production of 50,000 gear housings for a new off-road vehicle. Owner, Danny Tanner, has developed costs for three manufacturing alternatives. They are manufacturing using general-purpose equipment (GPE), a flexible manufacturing system (FMS), and an expensive, but efficient, dedicated machine (DM). The cost data follow:
|
| general-purpose equipment (GPE) | flexible manufacturing system (FMS) | dedicated machine (DM) |
| Annual contracted units | 50,000 | 50,000 | 50,000 |
| Annual fixed cost | $100,000 | $200,000 | $300,000 |
| Per unit variable cost | $50.00 | $30.00 | $25.00 |
- Which process is best for this contract?
- Determine the economical volume for each process using the cross over calculation method.
- Determine the best process for each of the following volumes: (1) 12,000 (2) 15,000 and (3) 25,000.
VICKY NAGAR - DO NOT ANSWER THIS QUESTION. YOU ANSWERED IT WRONG TWICE.
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