please explain in detail

"In my opinon, we ought to stop making our own drums and accept that outside supplier's offer," said Wim Niewnd, managing director of Artilles Refining. NV. of Aruba; "At a price of 60 florins per drum, we would be paying to firins less than it costs us to manufacture the drums in our own plant. (The currency in Aruba is the fotin, denoted by Afl) Since we use 100,000 drums a year, we would save 1,000,000 florins on an annual basis. Antilles Refining's present cost to manuficture one drum follows fbased on 100,000 drums per year): A decision about whether to make or buy the drums is especially important at this sme, since the equipment being used to make the erums is completely worn out and must be replaced. The choices facing the compary are as follows: - Alesnative t: Purchase new equipment and continue to make the drums. The equipment would cost Amt 150000; it would have a six-year useful life and no solvage value. The company uses atraight ine depreciation - Alternative 2. Purchase the drums from an outside sipplier at Af6o per drum under a six-year contuact. manufacturer, would reduce direct lobour and variabie ovethead coats by 30k the old equipment has no icsale value, Supervelon cost (Ans50000 per yeai) and direct materals cout per anm would not be affected by the new equipment, The new equipalient's capscty would be 550,000 drums per year: The company has no other use for the space betho uscd to procuce the crums. The company/s total general compary overhead would be unatfected by this deciaion Required: 1-a. Caiculote the toral costs and costs per drum under the two altematives. Assume that 100000, drums areneeded each year (Ahound 'Cost Per Orum" enswers to 2 decimal pleces.) - Alternative 1: Purchase new equipment and continue to make the drums. The equipment would cost Ant,350,000; it would have a six-year useful life and no salvage value. The company uses straight-line depreciation. - Alternative 2. Purchase the drums from an outsife supplier at Af60 per drum under a six.year contract. The new equipment would be more efficient than the equipment that Antlles Refining has been using and, according to the manufacturec, would reduce direct labour and variable overhead costs by 30%. The old equipment has no resale value. Supervision cost (Af1550,000 per yeat) and direct matetials cost per drum would not be affected by the new equipmerit. The new equipment's capacity would be 550,000 drums per yeat. The company has no other use for the space being used to produce the drums. The company's total general company overhead would be unaffected by this decision. Required: 1-0. Calculate the total costs and costs per drum under the two alternatives. Assume that 100000 drums are needed each year. (Round "Cost Per Drum" answers to 2 decimal ploces.) 1.b, Snould the compacy make or buy based on anolysis in pat (l-a?? Make Buy 2-b. 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 550,000 drums are needed cach year. (Pound "Cost Per Drum" onowers to 2 decimal ploces.) 2.d. Sheult the compary mahe or buy based an analysis in part 12c) ? Moive Euy. 3. This part of the aumstion is not pait of your Connect amsprmeot