Haver Company currently produces component RX5 for its sole product. The current cost per unit to manufacture the required 64,000 units of RX5 follows.

Direct materials

$

4.00

Direct labor

8.00

Overhead

9.00

Total costs per unit

$

21.00

Direct materials and direct labor are 100% variable. Overhead is 70% fixed. An outside supplier has offered to supply the 64,000 units of RX5 for $18.00 per unit.

Required:

1.	Calculate the incremental costs of making and buying component RX5.