Question

A company has a selling price of $1,800 each for its printers. each printer has a 2 year warranty that covers replacement of defective parts. it is estimated that 2% of all printers sold will be returned under the warranty at an average cost of $150 each. during november, the company sold 30,000 printers, and 400 printers were serviced under the warranty at a total cost of $55,000. the balance in the estimated warranty liability account at november 1 was $29,000. what is the company's warranty expense for the month of november? multiple choice $26,000 $60,000 $55,000 $45,000

Answer 1

Answer:

Warranty Expenses = $90,000

Explanation:

Given:

Printers Sold = 30,000

Rate of returned printer = 2%

Warranty Average Cost = $150

Computation of total printer return:

Estimated Printers returned = Printers Sold x Rate of returned printer

Estimated Printers returned = 30,000 x 2%

Estimated Printers returned = 600 Printers

Computation of warranty Expenses:

Warranty Expenses = Estimated Printers returned x Average Warranty Cost Warranty Expenses =  600 x $150

Warranty Expenses = $90,000

Answer 2

The warranty expense is $90,000.

The computation of the warranty expense is given below:

= Number of printers sold × estimated percentage × average cost

= 30000 × 2% × $150

= $90,000

Therefore we can conclude that the company's warranty expense for the month of November is $90,000.

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