Novak Manufacturing incurs unit costs of $7.00 ($5.00 variable and $2.00 fixed) in making a sub-assembly part for its finished product. A supplier offers to make 12,500 of the parts for $5.60 per unit. If it accepts the offer, Novak will save all variable costs and $1.00 of fixed costs. Prepare an analysis showing the total cost savings, if any, that Novak will realize by buying the part. (Round per unit answers to 2 decimal places, e.g. 15.25. If an amount reduces the net income then enter with a negative sign preceding the number, e.g. -15,000 or parenthesis, e.g. (15,000)) Number of units: Purchase price Variable manufacturing costs Fixed manufacturing costs Total annual cost The decision should be to buy the part 12500 $ Per Unit 5.00 2.00 $ $ Make Wildhorse Company has a factory machine with a book value of $161,000 and a remaining useful life of 6 years. A new machine is available at a cost of $251,500. This machine will have a 6-year useful life with no salvage value. The new machine will lower annual variable manufacturing costs from $599,500 to $499,000. Prepare an analysis that shows whether Wildhorse should retain or replace the old machine. (If an amount reduces the net income then enter with a negative sign preceding the number or parenthesis, e.g. -15,000, (15,000).) Keep Equipment Replace Equipment $ $ Variable costs New machine cost $ The old factory machine should be replaced eTextbook and Media 0 $ 251500 $ Net Income Increase (Decrease)