Make sure you understand the twoalternatives.

• The "make" means that KCSB assembles and ships all ofits regular bicycles.
• The "buy" means that KCSB pays another firm to assembleand ship some of its regular bicycles and uses the freed-upresources to assemble and ship specialty racingbicycles.
• TIP: Ignore revenues from regular bike sales - theywill be the same under both alternatives and are therefore commoncosts that can be ignored.

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King City Specialty Bikes (KCSB) produces high-end bicycles.Costs to manufacture and market the bicycles at last year's volumelevel of 2,100 bicycles per month are shown in the followingtable:

Variable manufacturing per unit	$258.00
Total fixed manufacturing	$291,900
Variable nonmanufacturing per unit	$51.00
Total fixed nonmanufacturing	$287,700

KCSB expects to produce and sell 2,500 bicycles per month in thecoming year. The bicycles sell for $580 each.

KCSB receives a proposal from an outside contractor who, for$170 per bicycle, will assemble 750 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 by30% for the 750 bicycles assembled by the outside contractor, andvariable nonmanufacturing costs for the 750 bicycles would be cutby 55%.

KCSB's marketing manager thinks that it could sell 80 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 $5,000 perbicycle and variable nonmanufacturing costs of $450 perbicycle.

If KCSB accepts the proposal, it would be able to save $14,595of 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.)