Kirby Industries is considering the possibility of outsourcing the activities of service department S1. In order to evaluate the bids from qualified vendors, Kirbys accountant provides the following revised data that reflect only the variable costs incurred.

Percent allocable to

Variable Cost Incurred	Service Department	S1	S2	P1	P2	P3
$300,000	S1	0%	30%	30%	40%	10%
104,000	S2	40%	20%	20%	15%	25%

The avoidable fixed costs of running service department S1 are estimated to be $390,000.

Required:

Determine the possible cost savings from eliminating service department S1.