3 "In my opinion, we ought to stop making our own drums and accept that outside supplier's offer said Wim Niewind managing director of Antilles Refining, N.V.. of Aruba. "At a price of $22 per drum, we would be paying $3.50 less than it costs us to manufacture the drums in our own plant. Since we use 95.000 drums a year, that would be an annual cost savings of $332,500.- Antilles Refining's current cost to manufacture one drum is given below (based on 95.000 drums per year) oped Direct materials Direct labour Variable overhead Fixed overhead ($2.78 general company overhead, $1.78 Total cost per drum Cost per Drun 10.60 8.00 1.50 5.40 depreciation, and, $1.00 supervision) 5 25.50 OOK int nices A decision about whether to make or buy the drums is especially important at this time because the equipment being used to make the drums is completely worn out and must be replaced. The choices facing the company are: Alternative Rent new equipment and continue to make the drums. The equipment would be rented for $285,000 per year. Alternative 2. Purchase the drums from an outside supplier at $22 per drum. The new equipment would be more efficient than the equipment that Antilles Refining has been using and according to the manufacturer, would reduce direct labout and variable overhead costs by 20%. The old equipment has no resale value. Supervision cost ($95.000 per year and direct materials cost per drum would not be affected by the new equipment. The new equipment's capacity would be 125.000 drums per year, The company's total general company overhead would be unaffected by this decision. (Round all Intermediate calculations to 2 decimal places.) Required: 1. To assist the managing director in making a decision, prepare an analysis showing the total cost and the cost per drum for each of the two alternatives given above. Assume that 95,000 drums are needed each year. a. What will be the total relevant cost of 95.000 drums if they are manufactured internally as compared to being purchased? Total relevant cost (05.000 drams) . OBI COSC per orun B Ded A decision about whether to make or buy the drums is especially important at this time because the equipment being used to make the drums is completely worn out and must be replaced. The choices facing the company are. Alternative Rent new equipment and continue to make the drums. The equipment would be rented for $285,000 per year. Alternative 2 Purchase the drums from an outside supplier at $22 per drum The new equipment would be more efficient than the equipment that Antilles Refining has been using and according to the manufacturer, would reduce direct labour and variable overhead costs by 20%. The old equipment has no resale value. Supervision cost ($95.000 per year) and direct materials cost per drum would not be affected by the new equipment. The new equipment's capacity would be 125.000 drums per year. The company's total general company overhead would be unaffected by this decision. (Round all Intermediate calculations to 2 decimal places.) Required: 1. To assist the managing director in making a decision, prepare an analysis showing the total cost and the cost per drum for each of the two alteratives given above. Assume that 95.000 drums are needed each year. a. What will be the total relevant cost of 95,000 drums if they are manufactured internally as compared to being purchased? inces Total relevant cost (05.000 drums) b. What would be the per unit cost of each drum manufactured Internally? (Round your answer to 2 decimal placet.) Por unit cost of drum w P x mil In a joint processing operation. Nolen Company manufactures three grades of sugar from a common input, sugar cane Joint processing costs up to the split-off point total $68,000 per year. The company allocates these costs to the joint products on the basis of their total sales value at the split-off point. These sales values are as follows, raw sugar, $34,000: brown sugar $37,000, and white sugar, $45.750 Each product may be sold at the split-off point or processed further. Additional processing requires no special facilities. The additional processing costs and the sales value after further processing for each product on an annual basis) are shown below. Koditional Processing Sales Product Costs Value Raw sugar $ 35,920 $ 68,000 Brown sugar $ 26,500 $ 65.500 $ 28,350 $ 89,500 white sugar Required: .. Compute the incremental profit (los) for each product (Loss amounts should be indicated by a mlous sign) Raw Sugar Crown Sugar White Sugar incremental prot(155) rences b. Which product or products should be sold at the split off point" (You may select more than one answer Single click the bok with the question mark to produce o check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer. Any boxes lots with a question mark will be outomatically graded os incorrect.) Raw sur Brown sugar Who sugar Prey 408 135 Next > Raw Sugar Brown Sugar White lugar Incremental profit (los) d b. Which product or products should be sold at the split-off point? (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer. Any boxes left with a question mark will be automatically graded as incorrect) Raw Sugar Brown sugar White sugar c. Wnich product or products should be processed further? (You may select more than one answer Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer. Any boxes left with a question mark will be automatically grededos incorrect.) Raw su Brown sugar White sugar 3 "In my opinion, we ought to stop making our own drums and accept that outside supplier's offer said Wim Niewind managing director of Antilles Refining, N.V.. of Aruba. "At a price of $22 per drum, we would be paying $3.50 less than it costs us to manufacture the drums in our own plant. Since we use 95.000 drums a year, that would be an annual cost savings of $332,500.- Antilles Refining's current cost to manufacture one drum is given below (based on 95.000 drums per year) oped Direct materials Direct labour Variable overhead Fixed overhead ($2.78 general company overhead, $1.78 Total cost per drum Cost per Drun 10.60 8.00 1.50 5.40 depreciation, and, $1.00 supervision) 5 25.50 OOK int nices A decision about whether to make or buy the drums is especially important at this time because the equipment being used to make the drums is completely worn out and must be replaced. The choices facing the company are: Alternative Rent new equipment and continue to make the drums. The equipment would be rented for $285,000 per year. Alternative 2. Purchase the drums from an outside supplier at $22 per drum. The new equipment would be more efficient than the equipment that Antilles Refining has been using and according to the manufacturer, would reduce direct labout and variable overhead costs by 20%. The old equipment has no resale value. Supervision cost ($95.000 per year and direct materials cost per drum would not be affected by the new equipment. The new equipment's capacity would be 125.000 drums per year, The company's total general company overhead would be unaffected by this decision. (Round all Intermediate calculations to 2 decimal places.) Required: 1. To assist the managing director in making a decision, prepare an analysis showing the total cost and the cost per drum for each of the two alternatives given above. Assume that 95,000 drums are needed each year. a. What will be the total relevant cost of 95.000 drums if they are manufactured internally as compared to being purchased? Total relevant cost (05.000 drams) . OBI COSC per orun B Ded A decision about whether to make or buy the drums is especially important at this time because the equipment being used to make the drums is completely worn out and must be replaced. The choices facing the company are. Alternative Rent new equipment and continue to make the drums. The equipment would be rented for $285,000 per year. Alternative 2 Purchase the drums from an outside supplier at $22 per drum The new equipment would be more efficient than the equipment that Antilles Refining has been using and according to the manufacturer, would reduce direct labour and variable overhead costs by 20%. The old equipment has no resale value. Supervision cost ($95.000 per year) and direct materials cost per drum would not be affected by the new equipment. The new equipment's capacity would be 125.000 drums per year. The company's total general company overhead would be unaffected by this decision. (Round all Intermediate calculations to 2 decimal places.) Required: 1. To assist the managing director in making a decision, prepare an analysis showing the total cost and the cost per drum for each of the two alteratives given above. Assume that 95.000 drums are needed each year. a. What will be the total relevant cost of 95,000 drums if they are manufactured internally as compared to being purchased? inces Total relevant cost (05.000 drums) b. What would be the per unit cost of each drum manufactured Internally? (Round your answer to 2 decimal placet.) Por unit cost of drum w P x mil In a joint processing operation. Nolen Company manufactures three grades of sugar from a common input, sugar cane Joint processing costs up to the split-off point total $68,000 per year. The company allocates these costs to the joint products on the basis of their total sales value at the split-off point. These sales values are as follows, raw sugar, $34,000: brown sugar $37,000, and white sugar, $45.750 Each product may be sold at the split-off point or processed further. Additional processing requires no special facilities. The additional processing costs and the sales value after further processing for each product on an annual basis) are shown below. Koditional Processing Sales Product Costs Value Raw sugar $ 35,920 $ 68,000 Brown sugar $ 26,500 $ 65.500 $ 28,350 $ 89,500 white sugar Required: .. Compute the incremental profit (los) for each product (Loss amounts should be indicated by a mlous sign) Raw Sugar Crown Sugar White Sugar incremental prot(155) rences b. Which product or products should be sold at the split off point" (You may select more than one answer Single click the bok with the question mark to produce o check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer. Any boxes lots with a question mark will be outomatically graded os incorrect.) Raw sur Brown sugar Who sugar Prey 408 135 Next > Raw Sugar Brown Sugar White lugar Incremental profit (los) d b. Which product or products should be sold at the split-off point? (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer. Any boxes left with a question mark will be automatically graded as incorrect) Raw Sugar Brown sugar White sugar c. Wnich product or products should be processed further? (You may select more than one answer Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer. Any boxes left with a question mark will be automatically grededos incorrect.) Raw su Brown sugar White sugar