Question

Angel Corporation began offering a two-year warranty on its products. The warranty program was expected to cost Angel 3% of net sales. Net sales made under warranty in 2021 were $218 million. Fifteen percent of the units sold were returned in 2021 and repaired or replaced at a cost of $4.40 million. The amount of warranty expense on Angel's 2021 income statement is:______.

Answer 1

the amount of warranty expense on Angel's 2021 income statement is $6.54 million

Step-by-step explanation:

The computation of the amount of warranty expense on Angel's 2021 income statement is given below:

Warranty expense on Angel's 2021 income statement is is

= Net sales × 3%

= $218 million × 3%

= $6.54 million

Hence, the amount of warranty expense on Angel's 2021 income statement is $6.54 million