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Managerial Accounting

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Abe Co Make or Buy: Profit change from buying at certain price

MGRACT-$JAVZS

Abe Co. produces a part that is used in the manufacture of one of its products. The costs associated with the production of 5,000 units of this part are as follows:

Manufacturing costs of 5,000 parts:
Direct Materials \$70,000
Direct Labor \$30,000
Variable Manufacturing Overhead \$40,000
Fixed Manufacturing Overhead \$100,000
Total cost \$240,000

Of the fixed manufacturing overhead, \$60,000 is the maintenance of the stamping machine that would be eliminated if they buy the part. If they can find a vendor with strong quality and reliability to make the part for \$35 each, what would be the total change in profits from buying the parts?

Enter as a positive (increase to profits) or a negative amount (decrease to profits). Enter as a whole number, without dollars signs or commas.