The Beca Corporation produces an executive jet for which it currently manufactures a fuel valve; the cost of the valve is indicated below:

		Cost per Unit
Variable costs
Direct material		$949
Direct labor		705
Variable overhead		275
Total variable costs		$1,929
Fixed costs
Depreciation of equipment		477
Depreciation of building		194
Supervisory salaries		330
Total fixed costs		1,001
Total cost		$2,930

The company has an offer from Duvall Valves to produce the part for $2,172 per unit and supply 1,050 valves (the number needed in the coming year). If the company accepts this offer and shuts down production of valves, production workers and supervisors will be reassigned to other areas where, unfortunately, they really are not needed. The equipment cannot be used elsewhere in the company, and it has no market value. However, the space occupied by the production of the valve can be used by another production group that is currently leasing space for $55,980 per year. Should the company make or buy the valve?

Total incremental

costsavings

of buying valves is

. The company should

buymake

the valves.