A Company Sells Leaf Blowers for $170 Each

question 74

Multiple Choice

A company sells leaf blowers for $170 each.Each unit has a 3 year warranty that covers replacement of defective parts.It is estimated that 4% of all leaf blowers sold will be returned under the warranty at an average cost of $30 each.During October,the company sold 400,000 leaf blowers.800 leaf blowers were serviced under the warranty during October at a total cost of $25,000.The balance in the Estimated Warranty Liability account on October 1 was $12,500.What is the company's warranty expense for the month of October?

• A)$24,000
• B)$25,000
• C)$37,500
• D)$467,500
• E)$480,000

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