Borges Machine Shop, Inc., has a 1-year contract for the production of 75,000 gear housings for a new off-road vehicle, Owner Luis Borges hopes the contract will be extended and the volume increasednext 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). Thecost data followAnnual contracted unitsAnnual fixed costPer unit variable costGeneral-PurposeEquipment (GPE)75,000$100,000$16.00Flexible ManufacturingSystem (FMS)75,000$225,000$14.00DedicatedMachine (DM)75,000$450,000$13.75Based on the total cost, the process that is best suited for the current contracted volume isSuppose the contracted volume changes to 275,000 gear housings. Based on the total cost, the process that is best suited for the new volume isSuppose the contracted volume changes to 375,000 gear housings. Based on the total cost, the process that is best suited for the now volume is

Total cost decision-making is a process of analysing and comparing the costs of several…

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

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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