Exercise $23-2$ Make or buy LO P$1$

Gelb Company currently manufactures $55,500$ units per year of a key component for its manufacturing process. Variable costs are $$5\mathrm{.}15$ per unit, fixed costs related to making this component are $$81,000$ per year, and allocated fixed costs are $$74,500$ per year. The allocated fixed costs are unavoidable whether the company makes or buys this component. The company is considering buying this component from a supplier for $$3\mathrm{.}70$ per unit.

Calculate the total incremental cost of making $55,500$ units and buying $55,500$ units. Should it continue to manufacture the component, or should it buy this component from the outside supplier?