United Corporation manufactures laser printers. United currently manufactures the 32,000 imaging drums that it uses in its printers. The annual costs to manufacture these 32,000 drums are as follows:

Cost of drum Total cost

Variable manufacturing cost $23 $736,000

Fixed manufacturing cost .. $65 $2,080,000

Total cost $88 $2,816,000

Hardware Solutions Inc. has offered to provide United with all of its imaging drum needs for $72 per drum. If United accepts this offer, 70% of the fixed manufacturing cost above could be totally eliminated. Also, United will be able to use the freed up space to generate $240,000 of income each year in the production of alternative products.

Based on the information presented, would United be better off to make the drums or buy the drums and by how much(3 points)?