the manufacturing cost of an air - conditioning unit is $544, and the full - replacement extended warranty…

the manufacturing cost of an air - conditioning unit is $544, and the full - replacement extended warranty costs $113. if the manufacturer 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.)\na. $55,158,336\nb. $11,457,522\nc. $2,129,274\nd. $66,717,252\nplease select the best answer from the choices provided

the manufacturing cost of an air - conditioning unit is $544, and the full - replacement extended warranty costs $113. if the manufacturer 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.)\na. $55,158,336\nb. $11,457,522\nc. $2,129,274\nd. $66,717,252\nplease select the best answer from the choices provided

Answer

Explanation:

Step1: Calculate number of units to be replaced

The number of units sold is $n = 506970$. The percentage of units to be replaced is $20%=0.2$. So the number of units to be replaced is $0.2\times506970$. $0.2\times506970 = 101394$

Step2: Calculate replacement cost

The manufacturing cost per - unit (which is the replacement cost as per the note) is $c = 544$. The total replacement cost $R$ is the number of units to be replaced times the cost per unit. $R=101394\times544$ $R = 101394\times544=101394\times(500 + 40+4)=101394\times500+101394\times40 + 101394\times4$ $=50697000+4055760+405576$ $=55158336$

Answer:

A. $55,158,336$