Note that you are not asked for the total costs if the firm makes and the total costs if the firm buys, but instead for the difference between these two total cost numbers. Make sure that you read the question carefully so that you can attach the correct sign (+ or -) to your numerical answer.

Oxford Engineering manufactures small engines. The engines are sold to manufacturers who install them in such products as lawn mowers. The company currently manufactures all the parts used in these engines, but it is considering a proposal from Zappo Electronics, a reliable supplier, to supply starter assembly units for $5.20 each.

The starter assembly is currently manufactured in Division 3 of Oxford Engineering. Last year, Division 3 manufactured 163,000 starter assemblies, but over the next several years, it is expected that 202,000 assemblies will be needed each year. Total costs related to the starter assembly for last year were as follows:

Direct material	$319,480
Direct labor	$244,500
Total overhead	$489,000
Total	$1,052,980

Further analysis of overhead revealed the following information:

• $171,150 of total overhead was variable.
• $193,850 of the fixed overhead can be avoided if the starter assembly is purchased from the supplier.

Also, if the company buys the assembly from Zappo, the vacated plant space could be used for storage and, in so doing, avoid $46,000 of outside storage charges currently incurred. REQUIRED

By how much will Oxford Engineering's total profits change if they decide to buy the starter assembly from Zappo Electronics instead of making it themselves? [Note: if the buy costs are less than the make costs, enter the difference as a positive number; if the buy costs are more than the make costs, enter the difference as a negative number.]

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