QUESTION 2. Pelican Products plc includes a Squidget in one of its products. The Squidget takes one hour to make has the following costs per unit:

Variable cost 10 Fixed cost allocation 5

If the business decides to purchase the Squidget from an outside source, it can use the spare capacity in the factory to produce Didgits that have a variable cost of 12 per unit and which can be sold for 20 per unit. The Didget takes two hours to make. What is the maximum amount that Pelican Products should be prepared to pay a supplier for a Squidget?

A 10 B 14 C 18 D 20