Brooke's Bike Company sold $3,780 worth of mountain bikes in June.Warranty expense is estimated to be 2% of sales.During June,Brooke's Bikes replaced two faulty parts under warranty.The parts cost a total of $100.The warranty expense for June was ________.

Question

Quizplus · Accepted Answer

The first step is to calculate the warranty expense. 
Warranty expense = 2% of sales = 0.02 x $3,780 = $75.60 
Then, we need to subtract the cost of the replaced parts from the calculated warranty expense: 
$75.60 - $100 = -$24.40 
This means that Brooke's Bike Company actually made a profit of $24.40 on their warranty expenses for June. However, since we are looking for the expense itself, we take the absolute value of this result and choose answer B: $75.60.

Brooke's Bike Company Sold $3,780 Worth of Mountain Bikes in June.Warranty