Please help me with this problem, the question is in the given attachment. Thank you.

The El Cerrito Company manufactures thermostats-consisting of relays, switches, and valves- for home and industrial use. El makes lts own switches. Columns 1 and 2 of the following table report the current costs for HDS, its heavyduty switch, based on an analysis of its various manufacturing activities: Exhibit 4 Total current Current cost Expected total costs Expected Costs of purchasing per unit of purchasing 10000 cost per 10000 units 1 2 units next 3 unit 4 Direct materials $80000 $8 $80000 $8 Direct labor 10000 1 10000 1 Variable overhead for power and 40000 4 40000 4 utilities 4"10000 4*10000 Mixed (variable and xed)overhead 13500 1.75 20000 2 costs of materials handling and setups 5000+25'500 5000+50'300 Fixed overhead costs of plant lease, 30000 3 30000 3 insurance, and administration Total manufacturg' 3 costs $177500 $11.75 $18000 $18 Materials-handling and set up activities occur each time in a batch of HDS is made. El Cerrito produces the 10000 units of H05 in 25 batches of 400 units each. The number of batches is the cost driver for these costs. Total materials handling and set up costs equal fixed costs of $5000 plus variable costs of $500 per batch {5000+500'25=17500). El Cerrito commences production only after it receives a customer order. Because they are trying to lower their inventory levels, El Cerrito's customers are pressuring the company to supply thermostats in smaller batch sizes. El Cerrito anticipates that next, the 10000 units of H05 expected to be sold will be manufactured In 50 batches of 200 units each. Through continuous improvement, El Cerrito expects to reduce variable costs per batch for materials handling and set up to $300. No other changes in fixed costs or variable costs per unit are anticipated. Another manufacturer offers to sell El 10000 units of H05 next year for $16 per unit on whatever delivery schedule El wants. Assume that financial factors predominate in this make orbuy decision. Should El Cerrito make or buy H05? Exhibit 5 Relevant items for make or buy decision for HDS Total relevant costs Per unit relevant costs Relevant items [mm\"z- Out purchase of parts __ Direct materials - Direct labor - Variable overhead | Mixed overhead | Total relevant costs I I Difference in favor of making HDS I *The $30000 of fixed costs is irrelevant