a company makes a product and has no way to determine which ones are faulty until an unhappy customer…

a company makes a product and has no way to determine which ones are faulty until an unhappy customer returns it. three percent of the products are faulty and will cost the company $200 each in customer service and repairs. if the company does not refund the customer when repairing the item, how much should the company charge to make a profit of $2.00 per item?\n$6.00\n$6.19\n$8.00\n$8.25

a company makes a product and has no way to determine which ones are faulty until an unhappy customer returns it. three percent of the products are faulty and will cost the company $200 each in customer service and repairs. if the company does not refund the customer when repairing the item, how much should the company charge to make a profit of $2.00 per item?\n$6.00\n$6.19\n$8.00\n$8.25

Answer

Explanation:

Step1: Calculate expected cost of faulty products

Let the price charged per item be $x$. The probability of a product being faulty is $p = 0.03$, and the cost of servicing a faulty product is $C = 200$. The expected cost due to faulty - products per item is $0.03\times200$.

Step2: Set up profit - equation

The profit per item is given by the selling price minus the expected cost of servicing faulty products. We want a profit of $2$ per item. So, the equation is $x-0.03\times200 = 2$.

Step3: Solve for $x$

First, calculate $0.03\times200=6$. Then, rewrite the equation as $x - 6=2$. Add $6$ to both sides of the equation: $x=2 + 6$. So, $x = 8$.

Answer:

C. $8.00$