"That old equipment for producing oil drums is wom out," said Bil Seebach, president of Hondrich Company. "We need to make a decision quickly." The company is trying to decide whether it should rent new equipment and continue to make its oil drums internally or whether it should discontinue production and purchase them from an outside supplier. The alternatives follow: Alternative 1: Rent new equipment for producing the oil drums for $182.000 per year, Alternative 2. Purchase oil drums from an outside supplier for $20 20 each. Hondrich Company's costs per unit of producing the oil drums internally (with the old equipment) are given below. These costs are based on a current activity level of 15,000 units per year: Direct materials $ 5.50 Direct labour 11.00 Variable overhead 1.61 Fbed overhead ($2 60 supervision, $1.80 depreciation, and $4.00 general company overhead) 8.40 Total cost per unit $ 25.50 The new equipment would be more efficient and, according to the manufacturer, would reduce direct labour costs and variable overhead costs by 25%. Supervision cost ($91,000 per year) and direct materials cost per unit would not be affected by the new equipment. The new equipment's capacity would be 65 000 oil drums per year. The total general company overhead would be unaffected by this decision. Required: 1. Seebach is unsure what the company should do and would like an analysis showing the unit costs and total costs for each of the two alternatives given above. Assume that 35,000 oil drums are needed each year. a. What will be the total relevant cost of 35,090 subassemblies if they are manufactured internally as compared to being purchased? Total relevant oost (35 000 subassemblies) b. What would be the per unit cost of the each subassembly manufactured intamally? (Do not round intermediate calculations, Round your answer to 2 decimal places.) Per unit coal of subassembly c. Which course of action would you recommend to the president? Indifferent between the two alternatives Manufacture internally Purchase from the outside supplier 2. Seebach is unsure what the company should do and would like an analysis showing the unit costs and total costs for each of the two alternatives given above. #-1. What will be the total relevant cost of 52,000 subassemblies if they are manufactured internally? Total relevant cool (52 090 subassemblies)#-2. What would be the per unit cost of subassembly manufactured internally? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Per unit coal of subassembly #-3. Which course of action would you recommend if 52,000 assemblies are needed each year? O ind ferent betwoon the two alternatives Manufacture internally Purchase from the outside supplier b-1, What wil be the total relevant cost of 65,000 subassemblies if they are manufactured internally? Total relevant cost (65 000 subassemblies) b-2. What would be the per unit cost of subassembly manufactured intomally? (Do not round intermediate calculations, Round your answer to 2 decimal places.) Per unit cost of subassembly b-3. Which course of action would you recommend if 65,000 assemblies are needed each year? O indifferent betwoon the two alternatives O Purchase from the outside supplier Manufacture Internally 3. This part of the question is not part of your Connect assignment