FIn my opeion, We ought to step makng our own drums and accept that ootside supoliers offe, sad Wim Niewindt, managing directer of Antiles Refming, NV, of Aruba BA a plice of 521 per drum, we would be poyng 56.05 less than it costs us to mbanufacture the drums in our own plant Smee we use 70,000 drums a yeat that would oe an annual cost savings of 5423.5000 Antifes Refining's current cost to manufacture orse drum is given below bosed on 70.000 drums pet yeai) A decision about whether to make or buy the drums if tspecially important at the time because the equ peient beimg used to mahe the drums is completely worn oit and must bereplaced the choices facing the company are. Aitemative 1 Rent mew equipment and continue to make the drums The equpmen would be rented for $1899000 per year Altemotive 2 Puichsse the drums from an cutsile supplec at $21 perdmem The hew equipaent would be mare efficient than the squigasent that Antiles Refing has been usino and accordeng to the mahifactarer, would reduce direct laboc and variable owedhead costs by 30% the old equigment has na iesnle value, Superviston cas (\$63,000 per yes) and direct moteriis cost per drum wowd not be affected by the new equpipeot The new equipments cooocity would be 100,000 drums per year The-company's total neneri compary oveimea would be unattected by this decision Required: 1. Assuming that 70.000 drums ate needed each yeac woat is the financial advanzage (disadvantage) of buying the drums from an outside supplie? 2. Assuming that 84,000 drums are needed each year, what is the financlat odvantage (clisadvantage) of buying the drums fiom an outside suppliet? 3. Assuming thot 100,000 diums are needed each year, what is the financil advantage (disadvantage) of buying the drums from an outside supplier? (For all requirements, enter any "disodventoges" os a negative volue. Do not round intermediate calculations. Do not leave ony cells blsnk.) FIn my opeion, We ought to step makng our own drums and accept that ootside supoliers offe, sad Wim Niewindt, managing directer of Antiles Refming, NV, of Aruba BA a plice of 521 per drum, we would be poyng 56.05 less than it costs us to mbanufacture the drums in our own plant Smee we use 70,000 drums a yeat that would oe an annual cost savings of 5423.5000 Antifes Refining's current cost to manufacture orse drum is given below bosed on 70.000 drums pet yeai) A decision about whether to make or buy the drums if tspecially important at the time because the equ peient beimg used to mahe the drums is completely worn oit and must bereplaced the choices facing the company are. Aitemative 1 Rent mew equipment and continue to make the drums The equpmen would be rented for $1899000 per year Altemotive 2 Puichsse the drums from an cutsile supplec at $21 perdmem The hew equipaent would be mare efficient than the squigasent that Antiles Refing has been usino and accordeng to the mahifactarer, would reduce direct laboc and variable owedhead costs by 30% the old equigment has na iesnle value, Superviston cas (\$63,000 per yes) and direct moteriis cost per drum wowd not be affected by the new equpipeot The new equipments cooocity would be 100,000 drums per year The-company's total neneri compary oveimea would be unattected by this decision Required: 1. Assuming that 70.000 drums ate needed each yeac woat is the financial advanzage (disadvantage) of buying the drums from an outside supplie? 2. Assuming that 84,000 drums are needed each year, what is the financlat odvantage (clisadvantage) of buying the drums fiom an outside suppliet? 3. Assuming thot 100,000 diums are needed each year, what is the financil advantage (disadvantage) of buying the drums from an outside supplier? (For all requirements, enter any "disodventoges" os a negative volue. Do not round intermediate calculations. Do not leave ony cells blsnk.)
