Question

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 comma 000200,000	200 comma 000200,000	200 comma 000200,000
Annual fixed cost	$ 150 comma 000$150,000	$ 200 comma 000$200,000	$ 480 comma 000$480,000
Per unit variable cost	$ 16.00$16.00	$ 14.00$14.00	$ 13.00$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 ________ 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).

Answer 1