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.)

*a.
$55,158,336
b.
$11,457,522
c.
$2,129,274
d.
$66,717,252

Answer 1

a

Explanation:

Answer 2

The replacement cost of 20% AC is $55,158,336

A is correct.

Explanation:

The manufacturing cost of an air-conditioning unit is $544 and the full-replacement extended warranty costs $113.

Total cost per air-conditioning with full replacement = 544+113 = $657

If the manufacturer sells 506,970 units with extended warranties and must replace 20% of them as a result.

Number of product for replace = 20% of 506,970 = 0.20 x 506970 = 101394

Note: Replacement cost is equal to manufacturing cost.

Replacement cost = Manufacturing cost = $544

Number of product for replacement = 101394

Total cost for replacement = 101394 x 544 = $55,158,336

Hence, The replacement cost of 20% AC is $55,158,336