Gelb Company currently manufactures 40,000 units of a key component for its manufacturing process at a cost of $4.45 per unit. Variable costs are $1.95 per unit, fixed costs related to making this component are $65,000 per year, and allocated fixed costs are $58,500 per year. The allocated fixed costs are unavoidable whether the company makes or buys this component. The company is considering buying this component from a supplier for $3.50 per unit.

Calculate the incremental costs for 40,000 units.

Total incremental costs of:
	Making the units	Buying the units
Total costs
Should the company continue to manufacture the part, or should it buy the part from the outside supplier?