Excom sells radios and each unit carries a two-year replacement warranty. The cost of repair defects under the warranty is estimated at 5% of the sales price. During September, Excom sells 132 radios for $54 each. One radio is actually replaced during September. For what amount in September would Excom debit Product Warranty Expense?

A. $4,088

B. $28

C. $49

D. $358

Question

Business

Tara

28 October, 10:22

Excom sells radios and each unit carries a two-year replacement warranty. The cost of repair defects under the warranty is estimated at 5% of the sales price. During September, Excom sells 132 radios for $54 each. One radio is actually replaced during September. For what amount in September would Excom debit Product Warranty Expense?

A. $4,088

B. $28

C. $49

D. $358

+1

Answers (1)

Know the Answer?

Jennifer Noble · Answer 1

D. $358

Explanation:

The computation of the Product Warranty Expense is shown below:

= Number of radios sold * selling price per radios * estimated warranty percentage

= 132 radios * $54 * 5%

= $356.40

i. e $358 approx

By multiplying the number of radios sold with the selling price and the estimated warranty percentage we can get the product warranty expense 58