Howell Corporation produces an executive jet for which it currently manufactures a fuel valve; the cost of the valve is indicated below:

Cost per

Unit

Variable costs

Direct material

$$900$

Direct labor

$600$

Variable overhead

$300$

Fixed costs

Depreciation of equipment

$500$

Depreciation of building

$275$

Supervisory salaries

$300$

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

What is the incremental savings of buying the valves? $($The answer should be stated in a per$-$unit format and is a positive number$)$

Round to two decimal places.

Your Answer: