During May,Blast sold 650 portable CD players for $50 each and provided a one-year warranty with each unit.Each CD player cost Blast $25 to produce.If 10% of the goods sold typically need to be replaced over the warranty period,for what amount should Blast debit Product Warranty Expense in May?
A)$3,250
B)$1,625
C)$650
D)$1,300

Question

Quizplus · Accepted Answer

Blast should debit Product Warranty Expense for the cost of replacing 10% of the sold CD players. 10% of 650 players is 65 players. Each player costs $25 to produce, so the expense is 65 x $25 = $1,625.

During May,Blast Sold 650 Portable CD Players for $50 Each