Intermediate BB Limited makes three components: S, T and U. The following costs have been recorded:

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.

Transcribed Image Text:

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 com- ponents to BB Limited at the following prices: Component Component Component S T U Price each 4 7 5.50