Question

A company has a selling price of $2,150 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 $157 each. During November, the company sold 37,000 printers, and 470 printers were serviced under the warranty at a total cost of $62,000. The balance in the Estimated Warranty Liability account at November 1 was $32,500. What is the company's warranty expense for the month of November

Answer 1

$174,270

Step-by-step explanation:

The computation of the warranty expense for November is shown below:

= Number of printed sold × estimated percentage × average cost

= 37,000 printers × 3% × $157

= 1,110 printers ×$157

= $174,270

We simply applied the above formula so that the company warranty expense for November month could come and the same is to be considered