"In my opinion, we ought to stop making our own drums and accept that outside supplier's offer, said Wim Niewindt, managing director of Antliles Refining, N.V, of Aruba. "At a price of $19 per drum, we would be paying $5.45 less than it costs us to manufacture the drums in our own plant. Since we use 85,000 drums a year, that would be an annual cost savings of $463,250 Antilles Refining's current cost to manufacture one drum is given below (based on 85,000 drums per yeary Direet materials Direct labor Variable overhead Pixed overhead ($3.70 general $10.70 5.50 1.50 company overhead, $2.05 depreciation and, $1.00 supervision) rotal cost per drm 6.75 24.45 Anecauion abor grhetao crom s eecy imtan t n imebeuse the equiomentbeing used to make the drums is completely worn out and must be replaced. The choices facing the company are Anernative t Rent new equipment and continue to make the drums. The equipment would be rented for $255,000 per year Alternative 2: Purchase the drums from an outside supplier at $19 per drum The new equipment would be more efficient than the equipment that Antiles Refining has been using and, according to the manufacturer, would reduce direct labor and variable overhead costs by 30%. The old equipment has no resale value. Supervision cost ($85,000 per year) and direct materials cost per drum would not be affected by the new equipment. The new equipment's 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. Assuming that 85000 drums are needed each outside supplier? 2. Assuming that 100,000 drums are needed each year, what is the financial advantage (disadvantage) of buying the drums from an outside supplier? 3. Assuming that 125,000 drums are needed year, what is the financial advantage (disadvantage) of buying the drums from atn each year, what is the financial advantage (disadvantage) of buying the drums from an Prey of Next> 3 5 6 8