Borges Machine Shop, Inc., has a 1-year contract for the
production of 225,000 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 225,000 225,000 225,000
Annual fixed cost $150,000 $250,000
$480,000
Per unit variable cost $15.00
$14.50 $13.75
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 225,000 gear housings for a new off-road vehic
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Borges Machine Shop, Inc., has a 1-year contract for the production of 225,000 gear housings for a new off-road vehic
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