Boris, Inc. sells a single product for $900 per unit, including a 90-day warranty against defects. It is estimated that 3% of the units sold will prove defective and require an average repair cost of $70 per unit. During July, 800 units were sold. Five of them were reported defective and repaired in July.
What amount should be added to the Estimated Liability for Product Warranties for July?

Question

Quizplus · Accepted Answer

800 x 0.03 = 24 defective
24 - 5 = 19; 19 x $70 = $1,330