Question

razell Corporation offers a two-year warranty on its products. The warranty program was expected to cost Brazell 4% of net sales. Net sales in 2020 were $201 million. Fifteen percent of the units sold were returned in 2020 and repaired or replaced at a cost of $5.00 million. The amount of warranty expense on Brazell's 2020 income statement is:

Answer 1

Answer:

$8,040,000

Explanation:

Net sales made under warranty in 2020 = $201 million

Warranty Cost = 4%

Calculation of Warranty expense on Brazell's 2020 income statement:

= Net sales made under warranty in 2020 * Warranty Cost

= $201 million * 4%

= $8,040,000

So, the amount of warranty expense on Brazell's 2020 income statement is $8,040,000.