![PROBLEM 12-24 Make or Buy Analysis LO3] In my opinion, we ought to stop making our own drums and accept that outside suppliers offer said Wim Niewindt, managing director of Antilles Refining, N.V., of Aruba. At a price of 18 florins per drum, we would be paying 5 florins less than it costs us to manufacture the drums in our own plant. (The currency in Aruba is the florin, denoted below by fl.) Because we use 60,000 drums a year, that would be an annual cost savings of 300,000 florins. Antilles Refinings present cost to manufacture one drum is given below (based on 60,000 drums per year): Direct materials... Direct labor Variable overhead Fixed overhead (12.80 general company ...10.35 6.00 1.50 overhead.ตา 60 depreciation and, 10.75 supervision). Total cost per drum 5.15 23.00](http://img.homeworklib.com/questions/9896bbb0-70d7-11ea-86a5-776bd55035b8.png?x-oss-process=image/resize,w_560)
Homework Answers
1.
Cost for alternative 1
Description Amount ($)
Direct material 10.35
Direct labor 6
Variable overhead 1.5
total variable cost 17.85
Supervision 0.75
rent 2.25
total cost 20.85
Cost for alternative 2 = $ 18
Conclusion: We see from the above calculation that the cost for alternative 2 is lower than the cost for alternative 1. Hence it is advisable to buy the drums
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PROBLEM 12-24 Make or Buy Analysis LO3] "In my opinion, we ought to stop making our...
Problem 7-28 Make or buy Analysis {LO-7-3} “in my opinion, we ought to stop making our own drums and accept that outside accept supplier’s offer,” said Wim Niewindt, managing director of Antilles Refi...
Problem 7-28 Make or buy Analysis {LO-7-3} “in my opinion, we ought to stop making our own drums and accept that outside accept supplier’s offer,” said Wim Niewindt, managing director of Antilles Refining, N.V, of Aruba. “At a price of $18 per drum, we would be paying $5 less, than it costs us to manufacture the drums in our own plant. Since we use 60,000 drums a year that would be an annual cost savings of $300,000. Antilles Refining’s current...
Problem 11-28 Make or Buy Decisions [LO11-3] “In my opinion, we ought to stop making our...
Problem 11-28 Make or Buy Decisions [LO11-3] “In my opinion, we ought to stop making our own drums and accept that outside supplier’s offer,” said Wim Niewindt, managing director of Antilles Refining, N.V., of Aruba. “At a price of $22 per drum, we would be paying $3.50 less than it costs us to manufacture the drums in our own plant. Since we use 95,000 drums a year, that would be an annual cost savings of $332,500.” Antilles Refining’s current cost...
Problem 11-28 Make or Buy Decisions [LO11-3] “In my opinion, we ought to stop making our own drums and accept that outsi...
Problem 11-28 Make or Buy Decisions [LO11-3] “In my opinion, we ought to stop making our own drums and accept that outside supplier’s offer,” said Wim Niewindt, managing director of Antilles Refining, N.V., of Aruba. “At a price of $19 per drum, we would be paying $5.35 less than it costs us to manufacture the drums in our own plant. Since we use 60,000 drums a year, that would be an annual cost savings of $321,000.” Antilles Refining’s current cost...
Problem 11-28 Make or Buy Decisions [LO11-3] "In my opinion, we ought to stop making our...
Problem 11-28 Make or Buy Decisions [LO11-3] "In my opinion, we ought to stop making our own drums and accept that outside supplier's offer." said Wim Niewindt, managing director of Antilles Refining. N.V.. of Aruba. "At a price of $20 per drum, we would be paying $5.25 less than it costs us to manufacture the drums in our own plant. Since we use 95.000 drums a year, that would be an annual cost savings of $498,750." Antilles Refining's current cost...
"In my opinion, we ought to stop making our own drums and accept that outside supplier's...
"In my opinion, we ought to stop making our own drums and accept that outside supplier's offer," said Wim Niewindt, managing director of Antilles Refining, N.V., of Aruba. "At a price of $18 per drum, we would be paying $5 less than it costs us to manufacture the drums in our own plant. Since we use 60,000 drums a year, that would be an annual cost savings of $300,000." Antilles Refining's current cost to manufacture one drum is given below...
"In my opinion, we ought to stop making our own drums and accept that outside supplier's...
"In my opinion, we ought to stop making our own drums and accept that outside supplier's offer," said Wim Niewindt, managing director of Antilles Refining, N.V., of Aruba. "At a price of $20 per drum, we would be paying $4.25 less than it costs us to manufacture the drums in our own plant. Since we use 75,000 drums a year, that would be an annual cost savings of $318,750." Antilles Refining's current cost to manufacture one drum is given below...
"In my opinion, we ought to stop making our own drums and accept that outside supplier's...
"In my opinion, we ought to stop making our own drums and accept that outside supplier's offer," said Wim Niewindt, managing director of Antilles Refining, N.V., of Aruba. "At a price of $18 per drum, we would be paying $6.65 less than it costs us to manufacture the drums in our own plant. Since we use 65,000 drums a year, that would be an annual cost savings of $432,250." Antilles Refining's current cost to manufacture one drum is given below...
"In my opinion, we ought to stop making our own drums and accept that outside supplier's...
"In my opinion, we ought to stop making our own drums and accept that outside supplier's offer," said Wim Niewindt, managing director of Antilles Refining, N.V., of Aruba. "At a price of $21 per drum, we would be paying $4.85 less than it costs us to manufacture the drums in our own plant. Since we use 50,000 drums a year, that would be an annual cost savings of $242,500." Antilles Refining's current cost to manufacture one drum is given below...
“In my opinion, we ought to stop making our own drums and accept that outside supplier’s...
“In my opinion, we ought to stop making our own drums and accept
that outside supplier’s offer,” said Wim Niewindt, managing
director of Antilles Refining, N.V., of Aruba. “At a price of $19
per drum, we would be paying $5.80 less than it costs us to
manufacture the drums in our own plant. Since we use 70,000 drums a
year, that would be an annual cost savings of $406,000.” Antilles
Refining’s current cost to manufacture one drum is given below...
“In my opinion, we ought to stop making our own drums and accept that outside supplier’s...
“In my opinion, we ought to stop making our own drums and accept that outside supplier’s offer,” said Wim Niewindt, managing director of Antilles Refining, N.V., of Aruba. “At a price of $21 per drum, we would be paying $7.05 less than it costs us to manufacture the drums in our own plant. Since we use 65,000 drums a year, that would be an annual cost savings of $458,250.” Antilles Refining’s current cost to manufacture one drum is given below...
Problem 11-28 Make or Buy Decisions [LO11-3] "In my opinion, we ought to stop making our own drums and accept that outside supplier's offer." said Wim Niewindt, managing director of Antilles Refining. N.V.. of Aruba. "At a price of $20 per drum, we would be paying $5.25 less than it costs us to manufacture the drums in our own plant. Since we use 95.000 drums a year, that would be an annual cost savings of $498,750." Antilles Refining's current cost...
"In my opinion, we ought to stop making our own drums and accept that outside supplier's offer," said Wim Niewindt, managing director of Antilles Refining, N.V., of Aruba. "At a price of $18 per drum, we would be paying $5 less than it costs us to manufacture the drums in our own plant. Since we use 60,000 drums a year, that would be an annual cost savings of $300,000." Antilles Refining's current cost to manufacture one drum is given below...
"In my opinion, we ought to stop making our own drums and accept that outside supplier's offer," said Wim Niewindt, managing director of Antilles Refining, N.V., of Aruba. "At a price of $20 per drum, we would be paying $4.25 less than it costs us to manufacture the drums in our own plant. Since we use 75,000 drums a year, that would be an annual cost savings of $318,750." Antilles Refining's current cost to manufacture one drum is given below...
"In my opinion, we ought to stop making our own drums and accept that outside supplier's offer," said Wim Niewindt, managing director of Antilles Refining, N.V., of Aruba. "At a price of $18 per drum, we would be paying $6.65 less than it costs us to manufacture the drums in our own plant. Since we use 65,000 drums a year, that would be an annual cost savings of $432,250." Antilles Refining's current cost to manufacture one drum is given below...
"In my opinion, we ought to stop making our own drums and accept that outside supplier's offer," said Wim Niewindt, managing director of Antilles Refining, N.V., of Aruba. "At a price of $21 per drum, we would be paying $4.85 less than it costs us to manufacture the drums in our own plant. Since we use 50,000 drums a year, that would be an annual cost savings of $242,500." Antilles Refining's current cost to manufacture one drum is given below...
“In my opinion, we ought to stop making our own drums and accept
that outside supplier’s offer,” said Wim Niewindt, managing
director of Antilles Refining, N.V., of Aruba. “At a price of $19
per drum, we would be paying $5.80 less than it costs us to
manufacture the drums in our own plant. Since we use 70,000 drums a
year, that would be an annual cost savings of $406,000.” Antilles
Refining’s current cost to manufacture one drum is given below...
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