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Han Products manufactures 30,000 units of part S-6 each year for use on its production line

Accounting

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Han Products manufactures 30,000 units of part S-6 each year for use on its production line. At this level of activity, the cost per unit for part S-6 is as follows:

 Direct materials$3.50Direct labour 9.50Variable overhead 2.50Fixed overhead 9.00Total cost per part$24.50

An outside supplier has offered to sell 26,500 units of part S-6 each year to Han Products for $22.00 per part. If Han Products accepts this offer, the facilities now being used to manufacture part S-6 could be rented to another company at an annual rental of $84,000. However, Han Products has determined that 30% of the fixed overhead being applied to part S-6 will be avoided if part S-6 is purchased from the outside supplier.

Required:

1. What is the net dollar advantage or disadvantage of accepting the outside supplier's offer? (Round "Total costs" and final answer to the nearest whole dollar amount.)