Use the Following Information for Questions

question 59

Multiple Choice

Use the following information for questions:
Direct Sales Inc.offers a two-year warranty against failure of its products.The estimated liability is 4% of sales in the year of sale and 6% in the second year.Sales for 2010 and 2011 were: $2,500,000 and $2,800,000, respectively.They incurred no warranty costs in 2010 but in 2011 they spent $175,000 on repairs related to the warranties from 2010 and 2011.
-The warranty expense for 2010 was:

• A)$80,000
• B)$100,000
• C)$150,000
• D)$250,000

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Definitions:

Bid-rigging

A form of fraud in which competitors agree in advance who will win a bidding process, thus undermining the competition.

Misleading Advertising

Advertising that deceives or is likely to deceive the consumer, often leading to an incorrect understanding or decision.

Competition Act

A law designed to preserve and promote competition and to protect consumers from anti-competitive practices by companies.

Money-back Guarantee

A pledge to refund a customer's payment if the product or service does not meet the advertised standards or expectations.