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Meile Machine Shop, Inc., has a 1-year contract for the production of 250,000 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 250,000 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) Flexible Manufacturing System (FMS) Dedicated Machine (DM) Annual contracted units Annual fixed cost Per unit variable cost 250,000 $150,000 250,000 $200,000 $16.00 $14.50 250,000 $480,000 $13.50 The option GPE is best when the contracted volume is below units. (Enter your response as a whole number.)
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