1. Assuming that 75,000 drums are needed each year, what is the financial advantage (disadvantage) of buying the drums from an outside supplier:- |
Statement of comparative cost analysis | |||
Manufacture | Purchase | ||
Direct material | $ 11.10 | Purchase cost | $ 20.00 |
Direct labor | $ 4.50 | ||
Variable overhead | $ 1.20 | ||
Fixed Overhead | $ 4.00 | ||
((75000+225000)/75000) | |||
Relevant cost | $ 20.80 | Relevant cost | $ 20.00 |
Statement of cost benefit analysis | |||
Financial advantage of buying the drums (20.8-20)*75000 | 60,000 |
2. Assuming that 93,750 drums are needed each year, what is the financial advantage (disadvantage) of buying the drums from an outside supplier:- |
Statement of comparative cost analysis | |||
Manufacture | Purchase | ||
Direct material | $ 11.10 | Purchase cost | $ 20.00 |
Direct labor | $ 4.50 | ||
Variable overhead | $ 1.20 | ||
Fixed Overhead | $ 3.20 | ||
((75000+225000)/93750) | |||
Relevant cost | $ 20.00 | Relevant cost | $ 20.00 |
Statement of cost benefit analysis | |||
Financial advantage (Disadvantage) of buying the drums | 0 |
3. Assuming that 125,000 drums are needed each year, what is the financial advantage (disadvantage) of buying the drums from an outside supplier:- |
Statement of comparative cost analysis | |||
Manufacture | Purchase | ||
Direct material | $ 11.10 | Purchase cost | $ 20.00 |
Direct labor | $ 4.50 | ||
Variable overhead | $ 1.20 | ||
Fixed Overhead | $ 2.40 | ||
((75000+225000)/125000) | |||
Relevant cost | $ 19.20 | Relevant cost | $ 20.00 |
Statement of cost benefit analysis | |||
Financial (Disadvantage) of buying the drums (19.2-20)*125000 | -100,000 |
"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 $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 $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 $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 $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 $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...
Check my work "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...