Question

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?

Answer 1

We are given with a company profit of $ 5 profit where 2% of the products are faulty and the replacement-and-repait costs for the fauly products are equivalent to $ 100 each. Due to these faulty products, the equation becomes $ 5/ 1 = $ x / 0.98. The proft per item then is $ 4.9.