Jamison Company Uses IFRS for Its Financial Reporting

question 110

Multiple Choice

Jamison Company uses IFRS for its financial reporting. It produces machines that sell globally. All sales are accompanied by a one-year warranty. At the end of the year, the company has the following data:
-2,500 units were sold during the year.
-The trend over the past five years has been that 4% of the machines were defective in some way and had to be repaired. Of this 4%, half required a full replacement at a cost of £3,000 per unit and half were able to be repaired at an average cost of £300.
What is the expected value of the warranty cost provision?

• A) £300,000
• B) £165,000
• C) £330,000
• D) £150,000

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Definitions:

Creativity And Consumer Focus

A business approach that emphasizes innovative thinking and prioritizes understanding and meeting consumer needs.