Each Unit of a Product Requires Eight Components

Question 120
Multiple Choice

Each unit of a product requires eight components. The average number of components is 8.25 due to component failure. Purchasing higher quality components can reduce the average number of components to four per unit. The cost per component is $500. What is the reduction in failure costs per unit due to purchasing higher quality components? A) $43.75 B) $125.00 C) $175.00 D) $350.00