A company makes a $5 profit on each non-faulty product it sells. Approximately 2% of the products manufactured are faulty, with no way to discover which ones are faulty before delivery. If replacement-and-repair costs for the faulty products are $100 each, what is the profit per item? a. loss of $15.10 b. loss of $15 c. profit of $2.90 d. profit of $3.00

Question

Mathematics

Sundance

12 August, 12:12

A company makes a $5 profit on each non-faulty product it sells. Approximately 2% of the products manufactured are faulty, with no way to discover which ones are faulty before delivery. If replacement-and-repair costs for the faulty products are $100 each, what is the profit per item? a. loss of $15.10 b. loss of $15 c. profit of $2.90 d. profit of $3.00

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Antony Finley · Answer 1

Let's assume that there are 100 products.

There are 98 are non - faulty products. Profit: 98 x 5 = $490

Also there are 2 faulty products.

Replacement and repair costs are: 2 x 100 = $200

$490 - $200 = $290

$290 : 100 = $2.90

Answer: C) profit of $2.90 per item.