Pendleton bicycles produces and sells custom-designed bikes and scooters. Currently, Pendleton fully produces and assembles all of the bicycle components. Recently, an outside bicycle parts producer has proposed producing handlebars for all of the Pendletons bicycles. The vendors price for producing the handlebars is $8.20 per unit.

This year, Pendleton plans production of 10,000 bicycles (and handlebars), below is their estimated cost for producing 10,000 handlebars:

Direct materials	$40,000
Direct labor	20,000
Manufacturing overhead:
Variable	15,000
Assigned fixed costs	30,000
Inspection, setup, and materials handling	2,000
Production machinery rental (for handlebars)	3,000
Total manufacturing costs	$110,000

Other information:

Pendleton produces handlebars in batches of 1,000 units.

Inspection, setup, and materials handling cost vary with the number of batches produced.

Pendleton rents the production machinery for making handlebars. If the handlebars are produced by the outside vendor, Pendleton will not rent the production machinery.

Required: (For this problem, you should ignore income taxes)

Reconsider the vendors offer with the following additional information. Assume that if Pendleton accepts the outside vendors offer to produce handlebars, Pendleton will use the available production space to add features to the bicycle that will allow Pendleton to increase the selling price of the bicycle by $20. Costs associated with the new bicycle features will be variable costs of $18 per bicycle plus $16,000 of fixed production costs.

Given this additional information, determine the financial implication associated with accepting the outside vendors offer to take over making 10,000 handlebars.