Borges Machine? Shop, Inc., has a? 1-year contract for the production of 200,000 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 Equipment? (GPE) |
Flexible Manufacturing System? (FMS) |
Dedicated Machine? (DM) |
|
|
Annual contracted units |
200,000????????? |
200,000?????????????? |
200,000?????? |
|
Annual fixed cost |
$150,000????????? |
$250,000?????????????? |
$500,000?????? |
|
Per unit variable cost |
$18.00????????? |
$14.00?????????????? |
$13.00?????? |
Part 2
The option GPE is best when the contracted volume is below enter your response here units ?(enter your response as a whole? number).