Downhill Boards, a producer of snowboards, is evaluating a new process for applying the finish to its snowboards. Downhill Boards currently incurs a fixed annual cost of $125,000 and has a variable cost of $0.90 per unit. Annual demand for the snowboards is 160,000. Fast Finish, Inc. has made a technological breakthrough in snowboard finish application. The firm will apply the finish for $0.23 per unit in variable costs plus a fixed annual cost of $230,000. What will it cost Downhill Boards to outsource the finishing process?
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