Paxton Company can produce a component of its product that incurs the following costs per unit: direct materials, $9.60; direct labor, $13.60, variable overhead $2.60 and fixed overhead, $7.60. An outside supplier has offered to sell the product to Paxton for $33.40. Compute the net incremental cost or savings of buying the component.

$2.60 cost per unit.

$7.60 savings per unit.

$0 cost or savings per unit.

$7.60 cost per unit.

$2.60 savings per unit.