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 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 75,000          75,000               75,000       Annual fixed cost $150,000          $250,000               $500,000       Per unit variable cost $16.00          $14.75               $13.00       Part 2 Based on the total​ cost, the process that is best suited for the current contracted volume is

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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 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
75,000         
75,000              
75,000      
Annual fixed cost
$150,000         
$250,000              
$500,000      
Per unit variable cost
$16.00         
$14.75              
$13.00      
Part 2
Based on the total​ cost, the process that is best suited for the current contracted volume is
 
 
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Suppose the contracted volume changes to

275,000

gear housings. Based on the total​ cost, the process that is best suited for the new volume is

 
DM
FMS
GPE
.
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