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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 2,050 bicycles per month are shown in the followingtable:
| Variable manufacturing per unit | $237.00 |
| Total fixed manufacturing | $225,500 |
| Variable nonmanufacturing per unit | $64.00 |
| Total fixed nonmanufacturing | $287,000 |
KCSB expects to produce and sell 2,450 bicycles per month in thecoming year. The bicycles sell for $590 each.
An outside contractor makes an offer to assemble 750 of KCSB'sbicycles per month and ship them directly to KCSB's customers asorders are received from its sales force. It will charge KCSB $170per bicycle. KCSB would provide the materials for each bicycle, butthe outside contractor would assemble, box, and ship the bicycles.If KCSB accepts the offer, its variable manufacturing costs wouldbe reduced by 40% for the 750 bicycles assembled by the outsidecontractor, and its variable nonmanufacturing costs for those 750bicycles would be cut by 60%. In addition, it would be able to save$22,550 of fixed manufacturing costs; fixed nonmanufacturing costswould be unchanged.
KCSB's marketing manager thinks that it could sell 85 specialtyracing bicycles per month for $6,500 each, and its productionmanager thinks that it could use the idle resources to produce eachof these bicycles for variable manufacturing costs of $5,300 perbicycle and variable nonmanufacturing costs of $300 perbicycle.
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.)
