Synergy Appliances sells dishwashers with a 4-year warranty. In 2013, sales revenue for dishwashers is $85,000. The company estimates warranty expense at 4.5% of revenues. What is the total estimated warranty payable of Synergy Appliances in 2013?
A)$3,825.00
B)$956.25
C)$1,400.00
D)$3,000.00

Question

Quizplus · Accepted Answer

The total estimated warranty payable is calculated by multiplying the sales revenue by the warranty expense rate: $85,000 * 4.5% = $3,825.00.

Synergy Appliances Sells Dishwashers with a 4-Year Warranty