Question

If average cost of a breakdown in a refinery is $150,000, and cost of preventative maintenance is $100,000 per month, what would be the expected loss if they do not do preventive maintenance? Use the following information.

a. $165000
b. $65000
c. $150000
d. None of answers are correct

Answer 1

The expected loss if preventative maintenance is not done would be $50,000.

Step-by-step explanation:

To calculate the expected loss if preventative maintenance is not done, we need to subtract the cost of preventative maintenance from the average cost of a breakdown. The expected loss would be $150,000 - $100,000 = $50,000. Therefore, the correct answer is $50,000.