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Paxton Company can produce a component of its product that incurs the following costs per unit: direct materials, $10.20; direct labor, $14.20, variable overhead $3.20

Paxton Company can produce a component of its product that incurs the following costs per unit: direct materials, $10.20; direct labor, $14.20, variable overhead $3.20 and fixed overhead, $8.20. An outside supplier has offered to sell the product to Paxton for $35.80. Compute the net incremental cost or savings of buying the component.

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