The Skywalker Company uses 5,000 units of part R2SD2 each year. The full manufacturing cost of one unit of part R2D2 at this volume is:

Direct materials	$ 5.00
Direct labor	7.50
Variable manufacturing overhead	3.00
Average fixed manufacturing overhead	2.00
Total	$17.50

An outside supplier has offered to sell Skywalker unlimited quantities of part R2D2 at a unit cost of $17.00. If Skywalker accepts this offer, it can eliminate 60 percent of the fixed costs assigned to part R2D2. Furthermore, the space devoted to the manufacture of part R2D2 can be rented to another company for $10,000 per year.

Determine in dollars, the increase or decrease of annual profits from Skywalker accepting the offer of the outside supplier. Show your work.