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Borges Machine Shop, Inc., has a 1-year contract for the production of 75,000 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) 75,000 $100,000 $15.00 Flexible Manufacturing System (FMS) 75,000 $225,000 $14.75 Dedicated Machine (DM) 75,000 $500,000 $13.00 Based on the total cost, the process that is best suited for the current contracted volume is Suppose the contracted volume changes to 275,000 gear housings. Based on the total cost, the process that is best suited for the new

Borges Machine Shop, Inc., has a 1-year contract for the production of 75,000 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) 75,000 $100,000 $15.00 Flexible Manufacturing System (FMS) 75,000 $225,000 $14.75 Dedicated Machine (DM) 75,000 $500,000 $13.00 Based on the total cost, the process that is best suited for the current contracted volume is Suppose the contracted volume changes to 275,000 gear housings. Based on the total cost, the process that is best suited for the new

Marketing
Marketing
20th Edition
ISBN:9780357033791
Author:Pride, William M
Publisher:Pride, William M
Chapter19: Pricing Concepts
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K Borges Machine Shop, Inc., has a 1-year contract for the production of 75,000 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) 75,000 $100,000 $15.00 Flexible Manufacturing System (FMS) 75,000 $225,000 $14.75 Dedicated Machine (DM) 75,000 $500,000 $13.00 Based on the total cost, the process that is best suited for the current contracted volume is Suppose the contracted volume changes to 275,000 gear housings. Based on the total cost, the process that is best suited for the new volumo in
Transcribed Image Text:K Borges Machine Shop, Inc., has a 1-year contract for the production of 75,000 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) 75,000 $100,000 $15.00 Flexible Manufacturing System (FMS) 75,000 $225,000 $14.75 Dedicated Machine (DM) 75,000 $500,000 $13.00 Based on the total cost, the process that is best suited for the current contracted volume is Suppose the contracted volume changes to 275,000 gear housings. Based on the total cost, the process that is best suited for the new volumo in
K Annual contracted units Annual fixed cost Per unit variable cost General-Purpose Equipment (GPE) 75,000 $100,000 $15.00 Flexible Manufacturing System (FMS) 75,000 $225,000 $14.75 Based on the total cost, the process that is best suited for the current contracted volume is Dedicated Machine (DM) 75,000 $500,000 $13.00 Suppose the contracted volume changes to 275,000 gear housings. Based on the total cost, the process that is best suited for the new volume is Suppose the contracted volume changes to 375,000 gear housings. Based on the total cost, the process that is best suited for the new volume is
Transcribed Image Text:K Annual contracted units Annual fixed cost Per unit variable cost General-Purpose Equipment (GPE) 75,000 $100,000 $15.00 Flexible Manufacturing System (FMS) 75,000 $225,000 $14.75 Based on the total cost, the process that is best suited for the current contracted volume is Dedicated Machine (DM) 75,000 $500,000 $13.00 Suppose the contracted volume changes to 275,000 gear housings. Based on the total cost, the process that is best suited for the new volume is Suppose the contracted volume changes to 375,000 gear housings. Based on the total cost, the process that is best suited for the new volume is
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