A Company Sells Computers at a Selling Price of $1,800

question 25

Multiple Choice

A company sells computers at a selling price of $1,800 each.Each computer has a 2 year warranty that covers replacement of defective parts.It is estimated that 2% of all computers sold will be returned under the warranty with an average cost of $150 each.During November,the company sold 30,000 computers and 400 computers were serviced under the warranty during November at a total cost of $55,000.The balance in the Estimated Warranty Liability account at November 1 was $29,000.What is the company's warranty expense for the month of November?

• A)$26,000
• B)$45,000
• C)$55,000
• D)$60,000
• E)$90,000

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Definitions:

Transportation Method

A mathematical optimization technique used for finding the most cost-efficient plan for distributing products from several suppliers to several consumers.

Aggregate Planning

A process of developing, analyzing, and maintaining a preliminary, approximate schedule of the overall operations of an organization.

Stockout Cost

The cost incurred when inventory is not available to meet demand.

Inventory Holding Cost

The total cost associated with storing unsold goods or materials, including warehousing, insurance, depreciation, and opportunity costs.