Kruger Company makes inboard-outboard engines for boats. Currently the company makes all parts for the engines, but recently Kruger received an offer to supply the engine blocks used to make the engines for a price of $190 each. Kruger's estimated costs of making the engine blocks, based on last year's costing data, are as follows:
Units produced ................................. 2,000
Total costs ..............................................
Direct materials ............................. $145,000
Direct labor ................................. $165,000
Manufacturing overhead .................. $200,000

Note that 30% of the overhead above is variable.
If the engine blocks are purchased, all of the variable costs can be eliminated and 20% of the fixed overhead cost can be avoided. The space used to produce the engine blocks can be leased to another company for $60,000 per year; however, additional fixed cost of $15,000 will be incurred if the facilities are leased. In addition, eight employees would lose their jobs. The company expects to make 2,500 engines during the next year. The production capacity will handle the increase in output without any increase in fixed costs.
Compute the change in profit for Kruger if it accepts the offer and buys the engine blocks?