Wildcat Computers Sells All of Its Computers for $2,500 Each

question 1

Essay

Wildcat Computers sells all of its computers for $2,500 each. During the month of February Wildcat sold 20 computers. It is estimated that the warranty expense is 2% of gross sales. Wildcat spent $100 in cash and $150 in parts repairing computers for this month.
Required: Prepare the journal entries to record the sale, record the estimated warranty expense, and record the warranty repairs.

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Definitions:

Processing Batches

Groups of items or units processed together in one operation to improve efficiency, often in manufacturing or data processing contexts.

Activity-based Costing

A costing method that assigns overhead and indirect costs to related products and services based on their usage of activities.

Overhead Cost

General expenses related to the operation of a business that are not directly tied to a specific product or service, including rent, utilities, and administrative expenses.

Supporting Assembly

Components or sub-assemblies that are used as part of a main assembly in manufacturing processes.