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Meile Machine Shop, Inc., has a 1-year contract for the production of 75,000 gear housings for a new off-road vehicle. Owner Laura Meile hopes
Meile Machine Shop, Inc., has a 1-year contract for the production of 75,000 gear housings for a new off-road vehicle. Owner Laura 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: General-Purpose Equipment (GPE) Annual contracted units Flexible Manufacturing System (FMS) Dedicated Machine (DM) $14.50 75,000 $500,000 $13.75 75,000 $250,000 Annual fixed cost Per unit variable cost 75,000 $100,000 $16.00 Based on the total cost, the process that is best suited for the current contracted volume is Clear all Final check
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