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Eliya Products is deciding whether to outsource the production of a certain component that is included in all of its products. It currently costs Eliya

Eliya Products is deciding whether to outsource the production of a certain component that is included in all of its products. It currently costs Eliya Products $1.80 to make each component in-house. If Eliya Products outsources, it can buy the component ready-made for $1.30 each and can shut down the production facilities it is currently using to manufacture the component and save $23,000 a year in fixed costs. Annual requirement for the component is 13,200 units. What is the effect of outsourcing?
The total savings if outsourced is:
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