Question

A company has a selling price of $1,850 each for its printers. Each printer has a 2 year warranty that covers replacement of defective parts. It is estimated that 3% of all printers sold will be returned under the warranty at an average cost of $151 each. During November, the company sold 31,000 printers, and 410 printers were serviced under the warranty. What is the company's warranty expense for the month of November?

Answer 1

$140,430

Step-by-step explanation:

A company estimated 3% of the printers sold will be returned under the warranty of 2 Years at an average cost of $151.00 each.

The company sold 31000 printers in the Month of November. So, at the time of sale (in the month of November) the company estimated 3% of 31000 printers i.e 930 Printers will be returned under warranty of 2 Years at a cost of $151.00 each. So, the company incurred the warranty cost/expense in month of November is;

930 Printers X $151.00 = $ 140430.00