Multiple Choice
Fail-Safe Computer Inc. sells equipment with a 2-year warranty. Prior experience indicates that costs for warranty repairs average 3% in the first year, and 2% in the second year. Sales were $300,000 and $400,000 in fiscal 2012 and 2013 respectively. It paid $5,000 for materials and labour to make warranty-related repairs in 2012. What amount will be recorded as warranty expense in 2012?
A) $15,000
B) $20,000
C) $21,000
D) $26,000
Correct Answer:
Verified
Correct Answer:
Verified
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