7 A mail order company finds 18 of the purchases of a partic

7. A mail order company finds 18% of the purchases of a particular item are returned. The company estimates each return costs $0.70 in transportation and extra handling. What is the expected extra cost due to returns per unit of this item?

Solution

Solution :

The expected extra cost due to returns per unit of this item = 0.18 X $ 0.70

Expected extra cost due to returns per unit = $ 0.126