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*$21) | $0.00 | $1,365,000.00 | -$1,365,000.00 |
Direct material | $780,000.00 | $0.00 | $780,000.00 |
Direct Labor | $312,000.00 | $0.00 | $312,000.00 |
Variable overhead | $104,000.00 | $0.00 | $104,000.00 |
Supervisory Salary - Avoidable | $52,000.00 | $0.00 | $52,000.00 |
Equipment Rent - Avoidable | $156,000.00 | $0.00 | $156,000.00 |
Total cost | $1,404,000.00 | $1,365,000.00 | $39,000.00 |
Solution 2:
Differential Analysis - Making Drum (alt 1) or Buy Drum (Alt2) - 80000 drums | |||
Particulars | Making Drum (Alt 1) | Buy Drum (Alt 2) | Financial advantage (Disadvantage) of buying (Alternative 2) |
Costs: | |||
Purchase Price (80000*$21) | $0.00 | $1,680,000.00 | -$1,680,000.00 |
Direct material | $960,000.00 | $0.00 | $960,000.00 |
Direct Labor | $384,000.00 | $0.00 | $384,000.00 |
Variable overhead | $128,000.00 | $0.00 | $128,000.00 |
Supervisory Salary - Avoidable | $52,000.00 | $0.00 | $52,000.00 |
Equipment Rent - Avoidable | $156,000.00 | $0.00 | $156,000.00 |
Total cost | $1,680,000.00 | $1,680,000.00 | $0.00 |
Solution 3:
Differential Analysis - Making Drum (alt 1) or Buy Drum (Alt2) - 100000 drums | |||
Particulars | Making Drum (Alt 1) | Buy Drum (Alt 2) | Financial advantage (Disadvantage) of buying (Alternative 2) |
Costs: | |||
Purchase Price (100000*$21) | $0.00 | $2,100,000.00 | -$2,100,000.00 |
Direct material | $1,200,000.00 | $0.00 | $1,200,000.00 |
Direct Labor | $480,000.00 | $0.00 | $480,000.00 |
Variable overhead | $160,000.00 | $0.00 | $160,000.00 |
Supervisory Salary - Avoidable | $52,000.00 | $0.00 | $52,000.00 |
Equipment Rent - Avoidable | $156,000.00 | $0.00 | $156,000.00 |
Total cost | $2,048,000.00 | $2,100,000.00 | -$52,000.00 |
"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 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 $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 $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 $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 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 $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 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...
“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...