Potassium Corp

question 130

Multiple Choice

Potassium Corp.uses the revenue approach to account for warranties.During 2014, the company sold $500,000 worth of products, all of which carried a two year warranty (included in the price) .It was estimated that 2% of the selling price represented the warranty portion, and that 60% of this related to 2014, and 40% to 2015.Assuming that Potassium incurred costs of $3,700 to service the warranties in 2015, what is the net warranty revenue (revenue minus warranty costs) for 2015?

• A)$300
• B)$1,300
• C)$3,700
• D)$4,000

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Definitions:

Burn Down

In project management, a graphical representation showing the amount of work remaining in a project over time, often used in agile development.

Chronic Depression

A mental health condition characterized by persistent feelings of sadness, hopelessness, and a lack of interest or pleasure in activities, lasting for two years or more.

Symptoms

Observable signs or indications of a disease or disorder experienced by individuals.

Anxiety

A feeling of worry, nervousness, or unease about something with an uncertain outcome often less severe than anxiety disorders.