Palisades Corporations Midwest Division manufactures subassemblies that are used in the corporations final products. Lynn Hardt of Midwests Profit Planning Department has been assigned the task of determining whether a component, JY65, should continue to be manufactured by Midwest or purchased from Marley Company, an outside supplier. JY65 is part of a subassembly manufactured by Midwest.

Marley has submitted a bid to manufacture and supply the 32,000 units of JY65 that Palisades will need for 20x1 at a unit price of $8.65. Marley has assured Palisades that the units will be delivered according to Palisades production specifications and needs. While the contract price of $8.65 is only applicable in 20x1, Marley is interested in entering into a long-term arrangement beyond 20x1.

Hardt has gathered the following information regarding Midwests cost to manufacture JY65 in 20x0. These annual costs will be incurred to manufacture 30,000 units.

Direct material $97,500

Direct labor 60,000

Factory space rental 42,000

Equipment leasing costs 18,000

Other manufacturing overhead 112,500

Total manufacturing costs $330,000

Hardt has collected the following additional information related to manufacturing JY65.

	Direct materials used in the production of JY65 are expected to increase 8 percent in 20x1.
	Midwests direct-labor contract calls for a 5 percent increase in 20x1.
	The facilities used to manufacture JY65 are rented under a month-to-month rental agreement. Thus, Midwest can withdraw from the rental agreement without any penalty. Midwest will have no need for this space if JY65 is not manufactured.
	Equipment leasing costs represent special equipment that is used in the manufacture of JY65. This lease can be terminated by paying the equivalent of one months lease payment for each year left on the lease agreement. Midwest has two years left on the lease agreement, through the end of the year 20x2.
	Forty percent of the other manufacturing overhead is considered variable. Variable overhead changes with the number of units produced, and this rate per unit is not expected to change in 20x1. The fixed manufacturing overhead costs are expected to be the same across a relevant range of zero to 50,000 units produced. Equipment other than the leased equipment can be used in Midwests other manufacturing operations. Calculate the total relevant cost to make JY65 and also to purchase it from Marley Company for 20x1. Total relevant cost to make JY-65: $287,520 Total relevant cost to purchase JY-65: $___________. (The answer is not +/- $7,720)