What is the cheapest cost for meeting the current order

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Reference no: EM13647819

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

 

Reference no: EM13647819

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