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 Annual contracted units Annual fixed cost Per unit variable cost General-Purpose Equipment (GPE) Flexible Manufacturing System (FMS) 225,000 $225,000 Dedicated Machine (DM) 225,000 $480,000 $13.00 225,000 $150,000 $18.00 Based on the cost, the process that is best suited for the current contracted volume is $14.75