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.