ward Doering Auto Sales is considering offering a special service contract that will coverthe total cost of any service work required on leased vehicles. From experience, the company manager estimates that yearly service costs are approximately normally distributed,with a mean of $150 and a standard deviation of $25.a. If the company offers the service contract to customers for a yearly charge of $200, whatis the probability that any one customer’s service costs will exceed the contract price of$200?b. what is ward’s expected profit per service contract?

Question

ward Doering Auto Sales is considering offering a special service contract that will cover
the total cost of any service work required on leased vehicles. From experience, the company manager estimates that yearly service costs are approximately normally distributed,
with a mean of $150 and a standard deviation of $25.
a. If the company offers the service contract to customers for a yearly charge of $200, what
is the probability that any one customer’s service costs will exceed the contract price of
$200?
b. what is ward’s expected profit per service contract?

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