2 nts eBook Print ferences "That old equipment for producing oil drums is worn out," said Bill Seebach, president of Hondri decision quickly." The company is trying to decide whether it should rent new equipment and co or whether it should discontinue production and purchase them from an outside supplier. The al Alternative 1: Rent new equipment for producing the oil drums for $207,000 per year. Alternative 2: Purchase oil drums from an outside supplier for $22.60 each. Hondrich Company's costs per unit of producing the oil drums internally (with the old equipmen based on a current activity level of 30,000 units per year: Direct materials Direct labour Variable overhead mpaky Fixed overhead ($3.45 supervision, $1.80 depreciation, and $4.00 general company overhead) Total cost per unit The new equipment would be more efficient and, according to the manufacturer, would reduce overhead costs by 25%. Supervision cost ($103,500 per year) and direct materials cost per unit equipment. The new equipment's capacity wo