question archive ABC Machine Shop, Inc
ABC Machine Shop, Inc
Subject:ManagementPrice: Bought3
ABC Machine Shop, Inc., has a 1-year contract for the production of 48,000 gear housings for a new off-road vehicle. ABC hopes that the contract will be extended and the production volume increased in the future. ABC is considering three different production technologies: general-purpose equipment (GPE), flexible manufacturing system (FMS), and the expensive, but efficient, option of a dedicated machine (DM). The annual fixed and per unit variable costs for the three alternatives are tabulated below:
|
GPE |
FMS |
DM |
|
| Annual fixed cost |
$260,000 |
$590,000 |
$810,000 |
| Per unit variable cost |
$13 |
$8 |
$4 |
What is the cheapest cost for meeting the current order for 48,000 units? Specify only the amount. e.g. 3500000
