A company has a selling price of $1,800 each for its printers.Each printer has a 2 year warranty that covers replacement of defective parts.It is estimated that 2% of all printers sold will be returned under the warranty at an average cost of $150 each.During November,the company sold 30,000 printers,and 400 printers were serviced under the warranty.What is the company's warranty expense for the month of November?
A)$26,000
B)$45,000
C)$55,000
D)$60,000
E)$90,000

Question

Quizplus · Accepted Answer

The warranty expense is calculated based on the estimated returns, not the actual returns. The company expects 2% of 30,000 printers to be returned, which is 600 printers. At $150 per printer, the warranty expense is 600 * $150 = $90,000.

A Company Has a Selling Price of $1,800 Each for Its