Meile Machine? Shop, Inc

Subject:ManagementPrice: Bought3

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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 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)LOADING...

?, 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

250,000         

250,000              

250,000      

Annual fixed cost

$150,000         

$200,000              

$480,000      

Per unit variable cost

$16.00         

$14.50              

$13.00      

Based on the? cost, the process that is best suited for the current contracted volume is