In 2013, Golden Dynamics Corporation began selling a new line of products that c
ID: 2507920 • Letter: I
Question
In 2013, Golden Dynamics Corporation began selling a new line of products that carries a two-year warranty against defects. Based upon past experience with other products, the estimated warranty costs related to dollar sales are as follows: first year of warranty 3%; second year of warranty 5%. Sales and actual warranty expenditures for 2013 and 2014 are presented below:
2013
2014
Sales
$500,000
$600,000
Actual warranty expenditures
24,000
36,000
For year ended December 31, 2014, the amount of warranty expense reported in 2014 would be:
$40,000
$42,000
$48,000
$60,000
2013
2014
Sales
$500,000
$600,000
Actual warranty expenditures
24,000
36,000
Explanation / Answer
Warrenty expense for 2014=5%*500000+3%*600000
=$43000
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.