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24 June, 10:13

Blast sells portable CD players, and each unit carries a one-year replacement warranty. The cost of repair defects under the warranty is estimated at 10% of the sales price. During May, Blast sells 650 portable CD players for $50 each. For what amount in May would Blast debit Product Warranty Expense? a.$650 b.$3,250 c.$1,625 d.$1,300

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  1. 24 June, 14:06
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    Option B is correct ($3,250)

    Product Warranty Expense = $3,250

    Explanation:

    Option B is correct ($3,250)

    In order to find Blast debit Product Warranty Expense we will proceed as follow:

    Formula we are going to use is:

    Product Warranty Expense = Cost of repair defects under the warranty * Total sales

    Total Sales = Price of 1 portable CD players * Total portable CD players Sold

    Total Sales=$50 * 650

    Total Sales=$32,500

    Product Warranty Expense = 10% * $32,500

    Product Warranty Expense = $3,250
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