BB Limited makes three componerits: S, T and U. The following costs have been recorded:
|
Component |
Component |
Component |
|
|
S |
T |
U |
|
|
UNIT COST |
UNIT COST |
UNIT COST |
|
|
(£) |
(£) |
(£) |
|
|
Variable cost |
2.50 |
8.00 |
5.00 |
|
Fixed cost |
2.00 |
8.30 |
3.75 |
|
Total cost |
4.50 |
16.30 |
8.75 |
Another company has offered to supply the components to BB Limited at the following prices:
|
Component |
Component |
Component |
|
|
S |
T |
U |
|
|
Price each |
£4 |
£7 |
£5.50 |
Which component(s), if any, should BB Limited consider buying in?
(a) Buy in all three components.
(b) Do not buy any.
(c) Buy in S and U.
(d) Buy in T only.