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Gemiola [76]
3 years ago
12

East Corp. manufactures stereo systems that carry a two-year warranty against defects. Based on past experience, warranty costs

are estimated at 4% of sales for the warranty period. During 2005, stereo system sales totaled $3,000,000, and warranty costs of $67,500 were incurred. In its income statement for the year ended December 31, 2005, East should report warranty expense of:
A. $52,500

B. $60,000

C. $67,500

D. $120,000
Business
1 answer:
11Alexandr11 [23.1K]3 years ago
7 0

Answer:

$52,500

Explanation:

Warranty cost are the cost associated with the repair or replacement of a product in case it does not perform as intended after purchase.

It is debited to the warranty expenses account and credited to the warranty liability account.

Total sales for the year - $3,000,000

Warranty estimate basis - 4%

Estimated warranty - 3,000,000 * 4% = $120,000

Warranty cost incurred = $67,500

Balance to be recorded for the year = 120,000 -67,500

$52,500

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Answer:

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Product: It is very important to develop your product to make the customers to have “willingness to pay”. So it has to have unique or good design, standards, quality and other important attributes. You should seek to sell the products which have big demand.

Price: There should be the reasonable price to the customers who will be able to buy your products. Sure, the price is established after the analysis of your costs (fix, variable and etc.). However, you should be careful about your rivals in the price policy. The buyers will have always power on you in this case so they can substitute your product to others.

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3 0
3 years ago
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blagie [28]

Answer:

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8 0
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The inventory turnover measures:
pashok25 [27]

Answer:

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A higher number usually suggests a healthier operation cycle for a business.

It is measured by,

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Hope that helps.

7 0
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Answer:

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D

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<u>Answer</u>:

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