Bruges Electronics Inc

question 27

Multiple Choice

Bruges Electronics Inc. offers one model of laptop computer for £1000 and a two-year warranty for £250. The retailer, as part of a Boxing Day promotion, offers a limited-time offer for the laptop, including delivery and the two-year warranty for £1,180. The cost of the computer to Bruges is £700. Any warranty repairs are assumed to be done ratably over time. Bruges accounts for transactions using the customer consideration model. In the first twelve months following the sale, Bruges incurred £980 of costs servicing the computers under warranty.
In the first twelve months, Bruges would record warranty expense of

• A) £784.
• B) £980
• C) £1,180.
• D) £1,380.

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Definitions:

Consumer Price Index

A metric that calculates the mean fluctuation in costs over time for a collection of consumer goods and services, as paid by urban buyers.

Real Wages

The purchasing power of an individual's earnings, taking into account inflation, which determines the amount of goods and services that can be bought.

Base Year

A specific year against which the real value of economic indicators is measured, allowing for comparison over time.

Percentage Changed

The amount, expressed as a percentage, that a value has increased or decreased compared to a previous value.