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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 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: Annual contracted units Annual fixed cost Per unit variable cost General-Purpose Equipment (GPE) 225,000 $125,000 $18.00 The option GPE is best when the contracted volume is below Flexible Manufacturing System (FMS) 225,000 $200,000 $14.00 Dedicated Machine (DM) 225,000 $500,000 $13.00 units (enter your response as a whole number).

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: Annual contracted units Annual fixed cost Per unit variable cost General-Purpose Equipment (GPE) 225,000 $125,000 $18.00 The option GPE is best when the contracted volume is below Flexible Manufacturing System (FMS) 225,000 $200,000 $14.00 Dedicated Machine (DM) 225,000 $500,000 $13.00 units (enter your response as a whole number).

Practical Management Science
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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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 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: Annual contracted units Annual fixed cost Per unit variable cost General-Purpose Equipment (GPE) 225,000 $125,000 $18.00 The option GPE is best when the contracted volume is below Flexible Manufacturing System (FMS) Dedicated Machine (DM) 225,000 $500,000 $13.00 225,000 $200,000 $14.00 ☐ units (enter your response as a whole number).
Transcribed Image Text: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: Annual contracted units Annual fixed cost Per unit variable cost General-Purpose Equipment (GPE) 225,000 $125,000 $18.00 The option GPE is best when the contracted volume is below Flexible Manufacturing System (FMS) Dedicated Machine (DM) 225,000 $500,000 $13.00 225,000 $200,000 $14.00 ☐ units (enter your response as a whole number).
The option GPE is best when the contracted volume is below 75,000 units (enter your response as a whole number). The option FMS is best when the contracted volume is between 75001 and 325,000 units (enter your responses as whole numbers). The option DM is best when the contracted volume is over 325,000 units (enter your response as a whole number).
Transcribed Image Text:The option GPE is best when the contracted volume is below 75,000 units (enter your response as a whole number). The option FMS is best when the contracted volume is between 75001 and 325,000 units (enter your responses as whole numbers). The option DM is best when the contracted volume is over 325,000 units (enter your response as a whole number).
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