"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 Aruba. "At a price of 150 florins per drum, we would be paying 10 fforins 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 currency in Arubs is the florin, denoted by Al.) Antlles Refining's present cost to manufacture one drum follows (based on 400,000 drums per year): A deckluon 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 rust be replaced. The choices facing the compary are as follows: - Aiternative t: Purchase new equipment and continue to make the drums. The equipment would cost Als,400,000, it would have a five year useful life and no salvage value. The corrpany uses straight line depreciation. - Altemative 2 Purchase the drums fiom an outside supplier at Altso per drum under a five-year contract The new equiphent would be more efficient than the equipment that Antilles Refining has been using and, according to the manufacture, would reduce direct tabour and varioble oveitead costs by 30%. The old equipment has no resale value. Superv sion cuppedly wotid be 8,200,000 dians per year, The company has no other use for the space being used to produce the drums. The companys sotat generat company ovethead would be unalfected by this decision. Required: 1-n. Colculate the tolat costs and couts per dium under the two aheinatives, Assume that 400000 drums are necded eoch vear. 1.0. Calculate the total costs and costs per drum under the two alternatives. Assume that 400,000 drums are needed each year. (Round "Cost Per Drum" onswers to 2 decimal places.) 1.b. Should the company make of buy based on analysis in part (1-a)? Make Buy 2-0. Calculate the total costs and costs per drum under the two alternatives: Assume that 250,000 drums are needed each year. (Round "Cost Per Drum" onswers to 2 decimal ploces.) 1.b. Should the company make or buy based on analysis in part (1-a)? Make Buy 2-0. Calculate the total costs and costs per drum under the two alternatives. Assume that 250,000 drums are needed each year. (Round "Cost Per Drum" answers to 2 decimal places.) 2-b. Should the company make or buy based on analysis in part ( 2 -a)? 2b. Should the company make or buy based on analysis in part (2-a)? 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" onswers to 2 decimal ploces.) 2-d. Should the company make or biry based on analysis in part (2-c)? 2-d. Should the company make or buy based on analysis in part (2-c)? Make Buy 3. This part of the question is not part of your Connect assignment