Question 7.A.20: Shah Ltd needs a component for one of its products. It can s...

Accounting and Finance for Non-Specialists

Shah Ltd needs a component for one of its products. It can subcontract production of the component to another business that will provide the components for £20 each. Shah Ltd can produce the components internally for a total variable cost of £15 per component. Shah Ltd has spare capacity.
Should the component be subcontracted or produced internally?

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