TB MC Qu. 23-76 (Algo) Paxton Company can produce a component of...

Paxton Company can produce a component of its product that incurs the following costs per unit: direct materials, $9.50; direct labor, $13.50, and incremental overhead $2.50. An outside supplier has offered to sell the product to Paxton for $33.00. Compute the net incremental cost or savings of buying the component.

Multiple Choice

• $2.50 cost per unit.

• $7.50 savings per unit.

• $0 cost or savings per unit.

• $7.50 cost per unit.

• $2.50 savings per unit.