Jemil Manufacturing incurs unit costs of $7.50 ($3.50 variable and $4.00 fixed) in making a sub-assembly part for its finished product. A supplier offers to make 10,000 of the parts for $5 per unit. If it accepts the offer, Jemil will save all variable costs and $1 of fixed costs.

Which of the following is correct?

Accept the offer. It would save the company $5,000 if they were to buy the part

Reject the offer. It would cost the company $5,000 more if they were to buy the part

Accept the offer. It would save the company $25,000 if they were to buy the part

Reject the offer. It would cost the company $25,000 more if they were to buy the part