Destin Company produces water control valves, made of brass, which it sells primarily to builders for use in commercial real estate construction. These valves must meet rigid specifications (i.e., the quality tolerance is small). Valves that, upon inspection, get rejected are returned to the Casting Department; that is, they are returned to stage one of the four-stage manufacturing process. Rejected items are melted and then recast. As such, no new materials in Casting are required to rework these items. However, new materials must be added in the Finishing Department for all reworked valves. As the cost accountant for the company, you have prepared the following cost data regarding the production of a typical valve:

Cost	Casting			Finishing			Inspection			Packing			Total
Direct materials	$	200		$	12		$	0		$	8		$	220
Direct labor		110			120			20			20			270
Variable manufacturing overhead		100			150			20			20			290
Allocated fixed overhead		70			80			40			10			200
	$	480		$	362		$	80		$	58		$	980
The company, spurred by intense price pressures from foreign manufacturers, recently initiated a number of quality programs. As a result, the rejection rate for valves has decreased from 5.0% to 3.5% of annual output (equal in total to 15,000 units). The reduction in reject rates has enabled the company to reduce its inventory holdings from $400,000 to $250,000. Destin estimates that the annual financing cost associated with inventory holdings is 12%

Provide a dollar estimate of the annual cost savings associated with the recently enacted quality improvements

Manufacturing Cost Savings: ??

Financing Cost Savings: ???

Total Estimated Savings: ???