Question

Benitez co. had sales of $800,000 in 2016. the company expects to incur warranty expenses amounting to 3% of sales. there were $13,000 of warranty obligations paid in cash during 2016. based on this information:

Answer 1

Benitez co. incurred less than expected in warranty expenses by $11,000. Although, if you look at in another way, the provided information may be saying that $13,000 of it was paid in cash but they still owe or will pay another way, the remaining $11,000 which would equal the three percent total.