Cost to make product per unit

Variable

Direct material 900.00

Direct labor 600.00

Variable overhead 300.00

Fixed Costs

Depreciation of equipment 500.00

Depreciation of building 300.00

Supervisory salaries 300.00

The company has an offer from another company to produce the part for $2,000 per unit and supply 1,000 valves (the number needed in the coming year). If the company accepts this offer and shuts down their production, production workers and supervisors will be reassigned to other areas. The equipment cannot be used elsewhere in the company, and it has no market value. However, the space occupied by the production of the valve can be used by another production group that is currently leasing space for $55,000 per year.

What is the incremental savings of buying the product?