Borges Machine Shop, Inc., has a 1-year contract for the production of 250,000 gear housings for a new off-roadvehicle. Owner Luis Borges hopes the contract will be extended and the volume increased next year. Borges hasdeveloped costs for three alternatives. They are general-purpose equipment (GPE), flexible manufacturingsystem (FMS), and expensive, but efficient, dedicated machine (DM). The cost data follow:Annual contracted unitsAnnual fixed costPer unit variable costGeneral-PurposeEquipment (GPE)250,000$100,000$18.00Flexible ManufacturingSystem (FMS)250,000$225,000$14.00DedicatedMachine (DM)250,000$525,000$13.00The option GPE is best when the contracted volume is below 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 aswhole numbers).The option DM is best when the contracted volume is over 325,000 units (enter your response as a whole number).

Decision-making in costing refers to the process of using cost information to make informed…

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

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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