the drums in our own plant Since we use 75.000 dirums a year, that would be an annual cost savings of 5468750 Antilles Refining's current cost to manufacture one drum is given below (based on 75.000 drums per year) Cost per Drum 5 10.65 Direct materials Direct labour Variable overhead Fixed overhead ($3.40 general company overhead, 31.90 depreciation, and 30.70 opervision 9.00 1. 6.00 Total cost per drum 27:25 A decision about whether to make or buy the drums is especially important at this time because the equipment being used to make the drums is completely worn out and must be replaced. The choices facing the company are Alterative Rent new equipment and continue to make the drums The equipment would be rented for S157,500 per year. Alternative 2. Purchase the drums from an outside supplier at $21 per drum The new equipment would be more efficient than the equipment that Antilles Refining has been using and according to the manufacturer, would reduce direct labour and variable overhead costs by 25% The old equipment has no resale value Supervision cost ($52,500 per year and direct materials cost per drum would not be affected by the new equipment. The new equipment's capacity would be 105.000 drums per year. The companys total general company overhead would be unaffected by this decision (Round all intermediate calculations to 2 decimal places.) Required: 1. To assist the managing director in making a decision, prepare an analysis showing the total cost and the cost per drum for each of the two alternatives given above. Assume that 75,000 drums are needed each year, a. What will be the total relevant cost of 75,000 drums if they are manufactured internally as compared to being purchased? OOK int Total Vukovart coat (75.000 dtumal ences b. What would be the per unit cost of each drum manutactured internally? (Round your answer to 2 decimal places) Per unit cost of drum c. Which course of action would you recommend to the managing director? O Purchase from the outside supplier Manufacture internally Indifferent between the two alternatives 2a-1. What will be the total relevant cost of 87,500 drums if they are manufactured internally? Total relevant cost (87,500 drums) 2a-2. What would be the per unit cost of drums? (Round your answer to 2 decimal places.) Por unit cost of drum 2a-3. What course of action would you recommend If 87,500 drums are needed each year? Indifferent between the two alternatives O Manufacture Internally O Purchase from the outside supplier 26-1. What will be the total relevant cost of 105,000 drums if they are manufactured internally? Total relevant cost (105,000 drums) 2b-2. What would be the per unit cost of drums? (Round your answer to 2 decimal places.) Per unit cost of drum 2b-3. What course of action would you recommend if 105.000 drums are needed each year? Manufacture internally O Purchase from the outside supplier Indifferent between the two alternatives