Question

The manufacturing cost of an air-condioning unit is $544, and the full-replacement extended warranty costs $113. If the manufacturer sells 506,970 units with extended warranties and must replace 20% of them as a result, how much will the replacement costs be? (Note: Assume manufacturing costs and replacement costs are the same.)

Answer 1

$11,457,522

Step-by-step explanation:

If the full extended warranty costs are $113 per unit replaced, and 20% of the 506,970 units sold will be replaced, then the total warranty costs are:

total warranty costs = total number of units sold x percentage of units that need warranty replacement x cost per unit replaced

total warranty costs = 506,970 units x 20% x $113 per unit = $11,457,52

Answer 2

$11,457,522

Step-by-step explanation:

If the full extended warranty costs are $113 per unit replaced, and 20% of the 506,970 units sold will be replaced, then the total warranty costs are:

total warranty costs = total number of units sold x percentage of units that need warranty replacement x cost per unit replaced

total warranty costs = 506,970 units x 20% x $113 per unit = $11,457,52