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Compute net incremental cost of buying component

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Reference no: EM132590892

Question 1: Paxton Company can produce a component of its product that incurs the following costs per unit: direct materials, $9.80; direct labor, $13.80, variable overhead $2.80 and fixed overhead, $7.80. An outside supplier has offered to sell the product to Paxton for $34.20. Compute the net incremental cost or savings of buying the component.

Multiple Choice

Option 1: $2.80 cost per unit.

Option 2: $7.80 savings per unit.

Option 3: $0 cost or savings per unit.

Option 4: $7.80 cost per unit.

Option 5: $2.80 savings per unit.

Reference no: EM132590892

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