Solution 1:
Differential Analysis - Making Drum (alt 1) or Buy Drum (Alt2) - 65000 drums | |||
Particulars | Making Drum (Alt 1) | Buy Drum (Alt 2) | Financial advantage (Disadvantage) of buying (Alternative 2) |
Costs: | |||
Purchase Price (65000*$18) | $0.00 | $1,170,000.00 | -$1,170,000.00 |
Direct material | $682,500.00 | $0.00 | $682,500.00 |
Direct Labor | $341,250.00 | $0.00 | $341,250.00 |
Variable overhead | $68,250.00 | $0.00 | $68,250.00 |
Supervisory Salary - Avoidable | $58,500.00 | $0.00 | $58,500.00 |
Equipment Rent - Avoidable | $175,500.00 | $0.00 | $175,500.00 |
Total cost | $1,326,000.00 | $1,170,000.00 | $156,000.00 |
Solution 2:
Differential Analysis - Making Drum (alt 1) or Buy Drum (Alt2) - 195000 drums | |||
Particulars | Making Drum (Alt 1) | Buy Drum (Alt 2) | Financial advantage (Disadvantage) of buying (Alternative 2) |
Costs: | |||
Purchase Price (195000*$18) | $0.00 | $3,510,000.00 | -$3,510,000.00 |
Direct material | $2,047,500.00 | $0.00 | $2,047,500.00 |
Direct Labor | $1,023,750.00 | $0.00 | $1,023,750.00 |
Variable overhead | $204,750.00 | $0.00 | $204,750.00 |
Supervisory Salary - Avoidable | $58,500.00 | $0.00 | $58,500.00 |
Equipment Rent - Avoidable | $175,500.00 | $0.00 | $175,500.00 |
Total cost | $3,510,000.00 | $3,510,000.00 | $0.00 |
Solution 3:
Differential Analysis - Making Drum (alt 1) or Buy Drum (Alt2) - 225000 drums | |||
Particulars | Making Drum (Alt 1) | Buy Drum (Alt 2) | Financial advantage (Disadvantage) of buying (Alternative 2) |
Costs: | |||
Purchase Price (225000*$18) | $0.00 | $4,050,000.00 | -$4,050,000.00 |
Direct material | $2,362,500.00 | $0.00 | $2,362,500.00 |
Direct Labor | $1,181,250.00 | $0.00 | $1,181,250.00 |
Variable overhead | $236,250.00 | $0.00 | $236,250.00 |
Supervisory Salary - Avoidable | $58,500.00 | $0.00 | $58,500.00 |
Equipment Rent - Avoidable | $175,500.00 | $0.00 | $175,500.00 |
Total cost | $4,014,000.00 | $4,050,000.00 | -$36,000.00 |
Please answer all of them "In my opinion, we ought to stop making our own drums...
"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 $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 $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...
"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...
"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...
"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 $21 per drum, we would be paying $5.10 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 $331,500.” 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 $20 per drum, we would be paying $4.45 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 $289,250.” 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 $5.10 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 $331,500." 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 $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...