Question

Canton Company sells a motor that carries a 60-day unconditional warranty against product failure. From prior years' experience, Canton estimates that 3% of units sold each period will require repair at an average cost of $160 per unit. During the current period, Canton sold 100,000 units and repaired 2,400 of those units. (a) How much warranty expense must Canton report in its cur

Answer 1

Answer:

$480,000

Explanation:

Calculation to determine much warranty expense must Canton report

Using this formula

Warranty expense=Average cost per unit*Unit sold*Estimated percentage of units sold

Let plug in the formula

Warranty expense= $160*100,000*3%

Warranty expense=$480,000

Therefore warranty expense that Canton must report is $480,000