A company has a selling price of $1,950 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 $153 each. During November, the company sold 33,000 printers, and 430 printers were serviced under the warranty at a total cost of $58,000. The balance in the Estimated Warranty Liability account at November 1 was $30,500. What is the company's warranty expense for the month of November?

Question

Business

Mandy

2 February, 16:47

A company has a selling price of $1,950 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 $153 each. During November, the company sold 33,000 printers, and 430 printers were serviced under the warranty at a total cost of $58,000. The balance in the Estimated Warranty Liability account at November 1 was $30,500. What is the company's warranty expense for the month of November?

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Ruben Butler · Answer 1

Answer

The company's warranty expense for the month of November is:

$100,980

Explanation:

In this question, we are asked to calculate the company's warranty expense for the month of November;

We proceed as follows;

Firstly, we identify the total number of printers sold by the company in the month of November. This is 33,000 printers according to the question

Now to calculate the warranty expense for the Month of November, we use the mathematical expression below;

Warranty expense = number of printers sold * percentage of printers to be returned * average cost of the printers

We identify that the percentage of printers returned is 2% while the average cost of the printers is $153. We plug these values alongside the number of printers sold into the equation.

Warranty expense for the month of November = 33,000 * 2% * 153 = $100,980