Compute the cost savings that the company makes per year

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A high-tech company in the US can have one of the popular items made offshore at half the price of making them in the US. However, about 90% of the items made offshore will be returned within the warranty period of 1 year for repairs. The following additional data are available.

Cost of making an item in the US = $250

Cost of repairing an item = $50

Number sold/ year = 500,000

Compute the cost savings that the company makes per year by making the item offshore.

Reference no: EM13176440

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