# A process has a defective rate of 14%. Through 100% inspection all defective products are…

A process has a defective rate of 14%. Through 100% inspection all defective products are separated and sold to a scrap collector at 40% of its cost.

Each product costs \$150 to construct or produce. The company applies a markup of 24% on all products for sale. Assume the total number of units to be 100.

Answer the following: The per unit sale price of “good” or “saleable” product is = \$ ______________ .

Where:

• The Number of defects = ____ units
• Amount received from selling defectives = ___ units *defect rate * product cost = \$___/unit
• Total cost incurred = Total units x product cost = \$____ .
• Number of good products = Total units – Defective units = ___ units
• Company applies a markup of 24%.
• Total Revenue desired = (Total units * Unit cost) * (1 + markup) = \$____ .
• Total Revenue = Revenue from good products + Revenue from defectives.
• Pricing = (Revenue from Good Products – Revenue from Defective Products) / Good Units
• Note: x and * are multiplication signs.

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