Microsoft Office Ac... IDM Archives - All P... M Gmail YouTube Maps Aa F < 175 of 344 > PROBLEM 9-7 Preparing a Make-or-Buy Analysis and Making an Equipment Replacement Decision [LO1-CC2, 3] CHECK FIGURE (1) Advantage to make: Afl126,000 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 36 florins per drum, we would be paying 10 florins less than it costs us to manufacture the drums in our own plant. Since we use 120,000 drums a year, we would save 600,000 florins on an annual basis." (The currency in Aruba is the florin, denoted by Afl.) Antilles Refining's present cost to manufacture one drum follows (based on 120,000 drums per year): Direct material Direct labour Variable overhead Fixed overhead (Afl5.60 general company overhead, Afl3.20 depreciation, and Afl 1.50 supervision) Total cost nor decimo Afl20.70 12.00 3.00 10.30 MAG 00