Paxton Company can produce a component of its product that incurs the following costs per unit: direct materials, $10.70; direct labor, $14.70, variable overhead $3.70 and fixed overhead, $8.70. An outside supplier has offered to sell the product to Paxton for $37.80. Compute the net incremental cost or savings of buying the component.

$3.70 cost per unit.

$8.70 savings per unit.

$0 cost or savings per unit.

$8.70 cost per unit.

$3.70 savings per unit.