Orbital Communications, Inc. manufactures communications satellites used in TV signal transmission. The firm currently purchases one component for its satellites from a European firm. An Orbital Communications engineering team has found a way to use the companys own component, part number A200, instead of the European component. However, the Orbital Communications component must be modified at a cost of $840 per part. The European component costs $11,000 per part. Orbital Communications part number A200 costs $6,800 before it is modified. Orbital Communications currently uses 12 of the European components per year.

Required:

Calculate the annual differential cost between Orbital Communications two production alternatives.