The manufacturing cost of an air-condioning unit is $544, and the full-replacement extended warranty costs $113. If the manufact
urer 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
The manufacturer sells 506,970 units or air-conditioning. The number of units to be replaced is 20% of that. So, 506970 (0.20) = 101394 units are to be replaced Since full-replacement extended warrant costs $113 per unit, we have: 101394 ($113) = $11,457,522
