Paxton Company can produce a component of its product that incurs the following costs per unit: direct materials, $10.80; direct labor, $14.80, variable overhead $3.80 and fixed overhead, $8.80. An outside supplier has offered to sell the product to Paxton for $38.20. Compute the net incremental cost or savings of buying the component.

$3.80 cost per unit.

$8.80 savings per unit.

$0 cost or savings per unit.

$8.80 cost per unit.

$3.80 savings per unit.