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A decision about whether to make or buy the drums is especially important at this time, since the equipment being used to make the drums

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A decision about whether to make or buy the drums is especially important at this time, since the equipment being used to make the drums is completely wom out and must be replaced. The choices facing the company are as follows: - Alternative 1: Purchase new equipment and continue to make the drums. The equipment would cost Afl1,890,000; it would have a six-year useful life and no salvage value. The company uses straight-line depreciation. - Alternative 2. Purchase the drums from an outside supplier at Afl72 per drum under a six-year contract. 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 30%. The old equipment has no resale value. Supervision cost (Al1,050,000 per year) and direct materials cost per drum would not be affected by the new equipment. The new equipment's capacity would be 1,050,000 drums per year. The company has no other use for the space being used to produce the drums. The company's total general company overhead would be unaffected by this decision. Required: Required: 1-0. Calculate the total costs and costs per drum under the two alternatives. Assume that 140,000 drums are needed each year. (Round "Cost Per Drum" answers to 2 decimal places.) 1.b. Should the company make or buy based on analysis in part (1-a)? Make Buy 2.0. Cakcutate the total costs and coits per drum under the two alternatives. Assume that 100,000 drums are needed each year. (Round "Cost Per Drum" answers to 2 decimal places.) 2-a. Calculate the total costs and costs per drum under the two alternatives. Assume that 100,000 drums are needed each year. (Round "Cost Per Drum" onswers to 2 decimal places.) 2.b. Strould the company make of buy besed on analysis in part (2-a)? Make Hiy 2.c. Calcuate the totat costs and costs per drum under the two attematives. Assume that 1,050,000 drums are needed each year (Round "Cost Per Drum" onswers 102 decimal places.)

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