Chaps Company currently makes a component used in one of its major products. The factory accountant has reported the following per unit costs associated with making this component: Direct materials Direct labour $12.54 5.77 10.00 $28.31 Total Based on a study of past data, the factory accountant believes that 30% of the manufacturing overhead associated with the manufacture of this product is variable, with the remaining 70% being a fixed cost. Moreover, of the fixed manufacturing overhead costs allocated to this product, about 10% are avoidable if production of this part is discontinued Rosa Company has offered to supply this part to Chaps Company under a long-term contract for $21.80 per unit. Shipping costs to the Chaps Company factory would be tool to make the part. Chaps Company already owns the tool, which cost them $25,000 to Chaps Company would have to pay for, and would last for the production of 250.000 units, after which there will be no salvage value. Required: Should Chaps Company purchase the component from Rosa Company, or continue manufacturing it themselves? Show your calculations