McGraw Company uses 9,500 units of Part X each year as a component in the assembly of one of its products. The company is presently producing Part X internally at a total cost of $158,500, computed as follows:

Direct materials	$ 28,500
Direct labor	48,000
Variable manufacturing overhead	19,000
Fixed manufacturing overhead	63,000
Total cost	$ 158,500

An outside supplier has offered to provide Part X at a price of $19.80 per unit. If McGraw Company stops producing the part internally, one-third of the fixed manufacturing overhead would be eliminated. Assume that direct labor is a variable cost.

Required:

Prepare an analysis showing the annual financial advantage or disadvantage of accepting the outside supplier's offer.