Problem 5: 10 pointsCaballero Manufacturing incurs unit costs of $7.90 ($6.10 va

Problem
5: 10 pointsCaballero
Manufacturing incurs unit costs of $7.90 ($6.10 variable and $1.80
fixed) in making a sub-assembly part for its finished product. A
supplier offers to make 12500 of the assembly part at $5.75 per
unit. If the offer is accepted Caballero will save all variable
costs but no fixed costs.
Instructions:
Prepare an analysis showing the total cost savings if any Caballero
will realize by buying the part.MakeBuyTotal
annual costCaballero
Company should _______________ the part because total annual costs
to make are less than total costs to buy.