Meile Machine Shop, Inc. has a 1-year contract for the production of 200,000 gear housings for a new off-road vehicle.

Owner Larry Meile hopes the contract will be extended and the volume increased next year. Meile 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:"
Which process is best for thiscontract?

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General Purpose Equipment GPE Flexible Manufacturing Dedicated Machine DM System FMS Annual contracted units Annual fixed cost Per unit variable cost 200,000 $100,000 200,000 S200,000 200,000 S500,000 $15.00 S14.00 $13.00