Paxton Company can produce a component of its product that incurs the following costs per unit: direct materials, $10.30; direct labor, $14.30, variable overhead $3.30 and fixed overhead, $8.30. An outside supplier has offered to sell the product to Paxton for $36.20. Compute the net incremental cost or savings of buying the component.

-$8.30 per unit

Explanation:

The computation of the net incremental cost or savings of buying the component is shown below:

Total making cost is

= $10.30 + $14.30 + $3.30 + $8.30

= $36.20

And, the relevant cost is

= $36.20 - $8.30

= $27.90

So, the increment cost for purchasing a component is

= $27.90 - $36.20

= -$8.30 per unit

The same is to be considered

the correct answer is economics is a game without winners or losers.

unlike sports or games economic is a game without losers or winner rather it is a game where everyone wins. parties of business doing businesses exchange money with each other and hence exchange is done on the basis of goods. one party takes the goods and other sales it so there is winner on both sides. each party values more highly the good it gets than the good it gives up. both sides exchange only because both intend to increase their value. so there is no concept of lose or win.

it should be