A company sells leaf blowers for $170 each.Each unit has a three-year warranty that covers replacement of defective parts.It is estimated that 4% of all leaf blowers sold will be returned under the warranty at an average cost of $30 each.During October,the company sold 400,000 leaf blowers; 800 leaf blowers were serviced under the warranty during October at a total cost of $25,000.The balance in the Estimated Warranty Liability account on October 1 was $12,500.What is the company's warranty expense for the month of October?
A)$24,000
B)$25,000
C)$37,500
D)$467,500
E)$480,000

Question

Quizplus · Accepted Answer

The warranty expense is calculated as 4% of the 400,000 leaf blowers sold, multiplied by the average cost of $30 per unit. This results in a warranty expense of $480,000 for October.

A Company Sells Leaf Blowers for $170 Each