"In my opinion, we ought to stop making our own drums and accept that oulside supplier's offer," said Wim Niewindt, managing director of Antilles Refining. N.V. of Aruba. "At a price of 48 florins per drum, we would be paying 10 florins less than it costs us to manufacture the drums in our own plant. (The currency in Aruba is the florin, denoted by All.) Since we use 60,000 drums a year, we would save 600,000 tlorins on an annual basis." Antilles Refining's present cost to manufacture one drum follows (based on 60,000 drums per year): A decision about whiether 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: - Alternative 1: Purchase new equipment and continue to make the drums. The equipment would cost Ali810,000: it would have a six-year useful life and no salvage value. The company uses straight tine depreclation. - Alternative 2: Purchase the drums from an outside supplier at All48 per drum under a six-year contract. The new equipment would be more efficient than the equipment that Altilles Refining has been using and, according to the manufacturer, would reduce direct labour and variable overhead casts by 30%. The old equipment has no resale value. Supervision cost (Afi210,000 per year) and direct materials cost per drum would not be affected by the new equipment. The new equipment's capacity would be 210,000 drums per year. The company has no other use for the space being used to produce the drums: The company's tolal general company overhead would be unaffected by this decision. Required: 1-a. Calculate the total costs and cost5 per drum under the two alfernatives. Assume that 60,000 drums are needed each yeai. (Round "Cost Per Drum" answers to 2 decimal ploces.) 2-a. Calculate the total costs and cosis per drum under the two alternatives. Assume that 50,000 drums are needed each year. (Roun "Cost Per Drum" onswers to 2 decimal places.) 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 altematives. Assume that 210,000 drums are needed each year (Round "Cost Per Drum" answers to 2 decimal ploces.) 2.c. Calculate the total costs and costs per drum under the two alternatives. Assume that 210,000 drums are needed each year. (Round "Cost Per Drum" answers to 2 decimal ploces.) 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. Required: 1-o. Calculate the total costs and costs per drum under the two alternatives. Assume that 60,000 drums are needed each year. (Rouni "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. Calculate the total costs and costs per drum under the two alternatives. Assume that 50,000 drums are needed each year. (Round "Cost Per Drum" onswers to 2 decimal places.)