f. Dropping Flight 401 would not allow FWU Airlines to reduce the number of aircraft in its fleet or the number of flight crew on payroll. Required: 1. Prepare an analysis showing what impact dropping Flight 401 would have on the FWU's profits. (Do not round intermediate calculations. Negative omounts should be indicated with a minus sign.) "In my opinion, we ought to stop making our own drums and accept that outside suppliet's offer," said Wim Niewindt, managing director of Antilles Refining, NV, of Anuba. "At a peice of 150 fiorins per drum, we would be paying 10 thorins less than it costs us to manufacture the drums in our own plant Since we use 400,000 drums a year, we would save 4,000,000 florins on an aninual bosis. (The currency in Aruba is the florin, denoted by Ani, Antilles Pefining's present cost to manufacture one drum foilows faosed on 400,000 drums peryear) 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 tacing the company are as follows: - Alemative t: Purchase new equipment and continue to make the drams. The equipment would cost A15,400.000; it would bave a five year usefui life and no salvage value. The corpany uses straightiline depteciation. - Alternative 2. Purchase the drums from an outside supplier at Aliso per drum under a five-year contract The new equipment would be more efficient than the equipment that Antilles Refining has been using and, according to the manufactures, would reduce direct labour and variable owethead costs by 30%. The old equipenent has no iesale value. Supervision cost (Ans,200,000 per year) and diect muterials cost per drum would not be affected by the new equipment. The new equiperisent? The consarys total general compary ovechead would be unsflecied by this deciston. Required: In my opinion, we ought to stop making our own drums and accept that outside supplier's offer," said Wim Niewindt, managing director of Antilles Refining. NV. of Arubs. "At a price of 150 florins per drum, we would be paying 10 florins less than it costs us to manufacture the drums in our own plant. Since we use 400,000 drums a year, we would save 4,000,000 florins on an annual basis: (The curtency in Aruba is the florin, denoted by All) Antilles Refining's present cost to manufacture one drum follows (based on 400,000 drums per year): 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 worn out and must be replaced. The choices facing the company are as follows: - Atternative 1: Purchase new equipment and continue to make the drums. The equipment would cost An5,400,000, it would have a five-year useful life and no salvage value. The company uses stralght -ine depreciation. - Alternative 2. Purchase the drums from an outside supplier at Alt5o per drum under a five-year contract. The new equipment would be more efficient than the equipment that Antiles Refining has been using and, according to the manufactures, would reduce direct labour and variable oveihead costs by 30%. The old equipment has no resale value. Supervision cost (Al18,200000 per year) and direct materials cost per drum would not be affected by the new equipment. The new equipment's capacily would be 8,200,000 drums per year. The company has no other use for the space being used to produce the drums. The companys total general company overhead would be unaffected by this decision. Required: 1.0. Calculate the total costs and costs per drum under the fwo alternatives. Assume that 400,000 drums are needed each year. 1-b. Should the company make or buy based on analysis in part (7-a)? Make Buy 2-a. Calculate the total costs and costs per drum under the two altematives. Assume that 250,000 drum5 are needed each year. (Round "Cost Per Drum" antwers to 2 decimal ploces.) 2.b. Should the compony make or buy based on analysis in part (2a) ? 2-b. Should the company make or buy based on analysis in part (2a) ? Make Buy 2-c. Calculate the total costs and costs per drum under the two alternatives. Assume that 8,200,000 drums are needed each year. (Round "Cost Per Drum" anowers to 2 decimat ploces.) 2-d. Should the company make or buy based on analysis in part (2c) ? f. Dropping Flight 401 would not allow FWU Airlines to reduce the number of aircraft in its fleet or the number of flight crew on payroll. Required: 1. Prepare an analysis showing what impact dropping Flight 401 would have on the FWU's profits. (Do not round intermediate calculations. Negative omounts should be indicated with a minus sign.) "In my opinion, we ought to stop making our own drums and accept that outside suppliet's offer," said Wim Niewindt, managing director of Antilles Refining, NV, of Anuba. "At a peice of 150 fiorins per drum, we would be paying 10 thorins less than it costs us to manufacture the drums in our own plant Since we use 400,000 drums a year, we would save 4,000,000 florins on an aninual bosis. (The currency in Aruba is the florin, denoted by Ani, Antilles Pefining's present cost to manufacture one drum foilows faosed on 400,000 drums peryear) 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 tacing the company are as follows: - Alemative t: Purchase new equipment and continue to make the drams. The equipment would cost A15,400.000; it would bave a five year usefui life and no salvage value. The corpany uses straightiline depteciation. - Alternative 2. Purchase the drums from an outside supplier at Aliso per drum under a five-year contract The new equipment would be more efficient than the equipment that Antilles Refining has been using and, according to the manufactures, would reduce direct labour and variable owethead costs by 30%. The old equipenent has no iesale value. Supervision cost (Ans,200,000 per year) and diect muterials cost per drum would not be affected by the new equipment. The new equiperisent? The consarys total general compary ovechead would be unsflecied by this deciston. Required: In my opinion, we ought to stop making our own drums and accept that outside supplier's offer," said Wim Niewindt, managing director of Antilles Refining. NV. of Arubs. "At a price of 150 florins per drum, we would be paying 10 florins less than it costs us to manufacture the drums in our own plant. Since we use 400,000 drums a year, we would save 4,000,000 florins on an annual basis: (The curtency in Aruba is the florin, denoted by All) Antilles Refining's present cost to manufacture one drum follows (based on 400,000 drums per year): 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 worn out and must be replaced. The choices facing the company are as follows: - Atternative 1: Purchase new equipment and continue to make the drums. The equipment would cost An5,400,000, it would have a five-year useful life and no salvage value. The company uses stralght -ine depreciation. - Alternative 2. Purchase the drums from an outside supplier at Alt5o per drum under a five-year contract. The new equipment would be more efficient than the equipment that Antiles Refining has been using and, according to the manufactures, would reduce direct labour and variable oveihead costs by 30%. The old equipment has no resale value. Supervision cost (Al18,200000 per year) and direct materials cost per drum would not be affected by the new equipment. The new equipment's capacily would be 8,200,000 drums per year. The company has no other use for the space being used to produce the drums. The companys total general company overhead would be unaffected by this decision. Required: 1.0. Calculate the total costs and costs per drum under the fwo alternatives. Assume that 400,000 drums are needed each year. 1-b. Should the company make or buy based on analysis in part (7-a)? Make Buy 2-a. Calculate the total costs and costs per drum under the two altematives. Assume that 250,000 drum5 are needed each year. (Round "Cost Per Drum" antwers to 2 decimal ploces.) 2.b. Should the compony make or buy based on analysis in part (2a) ? 2-b. Should the company make or buy based on analysis in part (2a) ? Make Buy 2-c. Calculate the total costs and costs per drum under the two alternatives. Assume that 8,200,000 drums are needed each year. (Round "Cost Per Drum" anowers to 2 decimat ploces.) 2-d. Should the company make or buy based on analysis in part (2c)