An Entity Sells Goods Under Warranty and Past Experience Shows

question 16

Multiple Choice

An entity sells goods under warranty and past experience shows that minor defects account for 10% of sales and major defects account for 2% of sales. If minor defects were detected in all goods sold the repair costs would be $260 000, and if major defects were detected in all goods sold the repair costs would be $990 000. The expected value of the warranty costs is:

• A) $ 0.
• B) $ 19 800.
• C) $ 45 800.
• D) $ 99 000.

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Definitions:

Virtuality Of Work

The concept refers to the practice of performing work digitally, often remotely, leveraging technology to accomplish tasks outside of a traditional office environment.

Information Technology

The use of computers and software to manage information, including the storage, retrieval, transmission, and manipulation of data.

Electronic Communication

The transmission of information using electronic systems or devices such as email, text messages, or social media platforms.

Peter Drucker

A prominent Austrian-born management consultant, educator, and author, recognized as the founder of modern management.