The new equipment would be more efficient than the equipment that Antilles 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 ($66,000 per year) and direct materials cost per drum would not be affected by the new equipment. The new equipments capacity would be 150,000 drums per year.

The companys total general company overhead would be unaffected by this decision.

Required:

1. Assuming that 60,000 drums are needed each year, what is the financial advantage (disadvantage) of buying the drums from an outside supplier?

2. Assuming that 120,000 drums are needed each year, what is the financial advantage (disadvantage) of buying the drums from an outside supplier?

3. Assuming that 150,000 drums are needed each year, what is the financial advantage (disadvantage) of buying the drums from an outside supplier?

(For all requirements, enter any "disadvantages" as a negative value. Do not round intermediate calculations. Do not leave any cells blank.) Production Needs Financial advantage (in number of (disadvantage) of drums) buying the drums 60,000 120,000 150,000