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:
General-Purpose Equipment (GPE) Flexible Manufacturing System (FMS) Dedicated Machine (DM)
Annual contracted units 225,000 225,000 225,000
Annual fixed cost $125,000 $250,000 $480,000
Per unit variable cost $15.00 $14.00 $13.00
A) The option GPE is best when the contracted volume is below units
B) The option FMS is best when the contracted volume is between and units (enter your response as a whole number)
C) The option DM is best when the contracted volume is over units (enter your response as a whole number)