Haver Company currently produces component RX5 for its sole product. The current cost per unit to manufacture the required 61,000 units of RX5 follows.
Particulars Amount
Direct materials $4
Direct labor $8
Overhead $9
Total costs per unit $21
Direct materials and direct labor are 100% variable. The Overhead is 80% fixed. An outside supplier has offered to supply the 61,000 units of RX5 for $19 per unit.
Required:
Calculate the incremental costs of making and buying component RX5.