Question: make or buy blunt ltd produces a component for inclusion...

1. (Make or Buy) Blunt Ltd produces a component for inclusion in its pocket calculator. The full absorption costs of production, based on an output level of 50,000 units are:

Materials
Labour
Variable overheads Fixed overheads Total cost

   50p
   25p
   35p
   70p

£ 1.80

A new supplier of electronic components is currently offering to supply an identical part for £1.55.

Should Blunt make or buy the component?