Step-by-step answer:
The steps are much easier to follow when we know how many product it sells. The number does not really matter, because we need the profit per item.
Say, the company made and sold 100 items of the product.
The revenue = 100*5 = $500.
On the average, 2 out of 100 are defective and need to be replaced at a cost of $100 each, so
replacement cost = 2* 100 = 200
So net profit for 100 items = $500 -$200 = $300
Net profit for each item = $300/100 = $3.00
Remark: since the product is replaced, no refund is necessary, so revenue stays at $300.
Balance in account cannot be less than
I don’t know if you need to round, but you can do so on the answer for mondays if necessary
On Monday, the animals cost $1.03125.
On Tuesday, the animals cost exactly $1.
