Marin Company Sells 4,000 Units of Its Product in 2011

question 28

Multiple Choice

Marin Company sells 4,000 units of its product in 2011 for $500 each.The selling price includes a one-year warranty on parts.It is expected that 3% of the units will be defective and that repair costs will average $50 per unit.In the year of sale, warranty contracts are honored on 80 units for a total cost of $4,000. What amount should Marin Company report as Warranty Expense in its 2011 income statement?

• A)$6,000.
• B)$4,000.
• C)$2,000.
• D)$30,000.

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Definitions:

Sociobiologist

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