Paxton Company can produce a component of its product that incurs the following costs per unit: direct materials, $10; direct labor, $14, variable overhead $3 and fixed overhead, $8. An outside supplier has offered to sell the product to Axle for $32. Compute the net incremental cost or savings of buying the component. $5.00 savings per unit. $3.00 cost per unit. $0 cost or savings per unit. $5.00 cost per unit. $3.00 savings per unit.

    Consume of Direct MAterial = 10

    Direct Labor = 14

    Variable aloft =3

    Total Variable consume = 27

    Purchase absorb = 32

    Incermental consume = 32- 27, = 5

    Fixed consume succeed be incurred in twain cases as it remains unchanged therfore it has not attributable attributable attributable been considered

    So By purchasing from traffic troop succeed incurr joined consume of $ 5