Borges Machine Shop, Inc., has a 1-year contract for the production of 200,000 gear housings for a new off-road vehicle. Owner LuisBorges hopes the contract will be extended and the volume increased next year. Borges has developed costs for three alternatives. Theyare general-purpose equipment (GPE), flexible manufacturing system (FMS), and expensive, but efficient, dedicated machine (DM). Thecost data follow:General-PurposeEquipment (GPE)200,000$100,000$15.00Annual contracted unitsAnnual fixed costPer unit variable costThe option GPE is best when the contracted volume is belowFlexible ManufacturingSystem (FMS)200,000$225,000$14.00DedicatedMachine (DM)200,000$500,000$13.00units (enter your response as a whole number).

Annual Contracted units = 200,000 unitsGPE:Annual Fixed Cost = FCg = $100,000Per unit Variable Cost…

Answered: Borges Machine Shop, Inc., has a 1-year…

Marketing

20th Edition

ISBN:9780357033791

Author:Pride, William M

Publisher:Pride, William M

Chapter19: Pricing Concepts

Section: Chapter Questions

Problem 6DRQ

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