Textbook Problem

Lambert Company has two suppliers: Deming and Leming. The cost of warranty work due to defective components is $2,000,000. The total units repaired under warranty average 100,000, of which 90,000 have components from Deming and 10,000 have components from Leming. Select the items below that represent true statements.

1. a. Components purchased from Leming cost $200,000 more than their purchase price.
2. b. Components purchased from Deming cost $1,800,000 more than their purchase price.
3. c. Components from Leming appear to be of higher quality.
4. d. All of these.
5. e. None of these.