King City Specialty Bikes (KCSB) produces high-end bicycles.Costs to manufacture and market the bicycles at last year's volumelevel of 1,950 bicycles per month are shown in the followingtable:
| Variable manufacturing per unit | $256.00 |
| Total fixed manufacturing | $202,800 |
| Variable nonmanufacturing per unit | $63.00 |
| Total fixed nonmanufacturing | $265,200 |
KCSB expects to produce and sell 2,350 bicycles per month in thecoming year. The bicycles sell for $560 each.
KCSB receives a proposal from an outside contractor who, for$150 per bicycle, will assemble 700 bicycles per month and shipthem directly to KCSB's customers as orders are received fromKCSB's sales force. KCSB would provide the materials for eachbicycle, but the outside contractor would assemble, box, and shipthe bicycles. The variable manufacturing costs would be reduced by40% for the 700 bicycles assembled by the outside contractor, andvariable nonmanufacturing costs for the 700 bicycles would be cutby 55%.
KCSB's marketing manager thinks that it could sell 70 specialtyracing bicycles per month for $6,000 each, and its productionmanager thinks that it could use the idle resources to produce eachof these bicycles for variable manufacturing costs of $4,900 perbicycle and variable nonmanufacturing costs of $300 perbicycle.
If KCSB accepts the proposal, it would be able to save $20,280of fixed manufacturing costs; fixed nonmanufacturing costs would beunchanged.
REQUIRED [Note: Round unit cost computations to thenearest cent]
What is the difference in KCSB's monthly costs between acceptingthe proposal and rejecting theproposal? (Note: If the costs ofaccepting the proposal are less than the costs of rejecting it,enter the difference as a positive number; if the accept costs aremore than the reject costs, enter the difference as a negativenumber.)
