Golden Eagle Inc. manufactures 20,000 units of part M-77 each year for use in its manufacturing operations. At this activity level, the cost to make M-77 on a per unit basis is as follows:

Variable manufacturing cost per unit	$16
Fixed manufacturing cost per unit	$6

A supplier has offered to sell Golden Eagle Inc. 20,000 units of M-77 for $18 per unit. If the company purchases the part from the supplier, 30% of its fixed costs will be eliminated. If the company purchases the factory, it will sit idle (i.e., there will be no alternative use for it). Compute the amount of cost savings that Golden Eagle Inc. will realize if rejects the suppliers offer and continues to make part M-77.