Mathematics · Make or Buy Decision Analysis
A business makes two components (A and B) with per unit costs as follows: Component A: Material $2, Labour $4, Variable overheads $6, General fixed overheads $4, Buy-in price $14. Component B: Material $5, Labour $6, Variable overheads $7, General fixed overheads $3, Buy-in price $17. Which component(s) should the company buy in from outside to maximize contribution?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Neither Component A nor Component B
- 2Both Component A and Component B
- 3Component B only✓
- 4Component A only
Correct answer
Component B only
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