Question

Check my work In my opinion, we ought to stop making our own drums and accept that outside suppliers offer, said Wim Niewi
Check my work 2 WUUU Ue 13u.uuv Ulums pei yeal The companys total general company overhead would be unaffected by this decis
0 0
Add a comment Improve this question Transcribed image text
Answer #1
1. Assuming that 65,000 drums are needed each year, what is the financial advantage (disadvantage) of buying the drums from an outside supplier:-
Statement of comperative cost analysis
Manufacture Purchase
Direct material $                 10.70 Purchase cost $              21.00
Direct labor $                  6.65
Variable overhead $                  1.05
Fixed Overhead $                  3.60
(189,000 / 70,000)
Relevant cost $                 22.00 Relevant cost $              21.00
Statement of cost benefit analysis
Financial advantage of buying the drums (22.00 - 21) * 65,000 65,000
2. Assuming that 90,000 drums are needed each year, what is the financial advantage (disadvantage) of buying the drums from an outside supplier:-
Statement of comperative cost analysis
Manufacture Purchase
Direct material $                 10.70 Purchase cost $              21.00
Direct labor $                  6.65
Variable overhead $                  1.05
Fixed Overhead $                  2.60
(175500+58500)/90000
Relevant cost $                 21.00 Relevant cost $              21.00
Statement of cost benefit analysis
Financial advantage (disadvantage) of buying the drums 0
3. Assuming that 130,000 drums are needed each year, what is the financial advantage (disadvantage) of buying the drums from an outside supplier:-
Statement of comperative cost analysis
Manufacture Purchase
Direct material $                 10.70 Purchase cost $              21.00
Direct labor $                  6.65
Variable overhead $                  1.05
Fixed Overhead $                  1.80
((175500+58500)/130000)
Relevant cost $                 20.20 Relevant cost $              21.00
Statement of cost benefit analysis
Financial disadvantage of buying the drums (20.2-21)*130000 -104,000
Add a comment
Know the answer?
Add Answer to:
Check my work "In my opinion, we ought to stop making our own drums and accept...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions
  • “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...

  • "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...

  • "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...

  • "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 $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...

  • Check my work "In my opinion, we ought to stop making our own drums and accept...

    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...

  • “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 $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...

    “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...

    "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...

    “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...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT