Provide answer accounting question Outback Camera Co. was organized to sell a singleproduct that carries a 60-day warranty againstdefects. Engineering estimates indicate that 5% ofthe units sold will prove defective and require anaverage repair cost of $40 per unit. DuringOutback's first month of operations, total sales were400 units; by the end of the month, 6 defective unitshad been repaired. The liability for productwarranties at month-end should be:a. $270b. $530c. $560d. $810e. none of these

Step 1: Definition of Warranty LiabilityWarranty liability is an estimated obligation recorded by a…

Answered: Outback Camera Co. was organized to…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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outback Co. was organized to sell a single product that carries a 45 day warranty against defects. Engineering estimates indicates that 12% of the units sold will prove defective and require an average repair cost of $20 per unti. During outbacks first month of operations, total sales were 200 untis; by the end of the month, nine defective units had been repaired. The Liability for product warrantees at month end should be. a.$180 b.$660 c.$300 d.$480
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Backpack Co. was organized to sell a single product that carries a 45-day warranty againstdefects. Engineering estimates indicate that 2% of the units sold will prove defective andrequire an average repair cost of $60 per unit. During Backpack’s first month of operations,total sales were 900 units; by the end of the month, five defective units had been repaired.The liability for product warranties at month-end should bea. $1,380.b. $300.c. $1,080.d. $780.
The goal of Video-Technical, Inc.'s formation was to offer a single product for $600 each with a 60-day warranty against flaws. According to engineering estimations, 5% of the units that are sold will turn out to be faulty and need an average $50 in repairs. $198,000 in sales were made overall in September, although 9 of the devices were later determined to be faulty and had to be fixed. At the conclusion of the month, the accumulated obligation for product guarantees should be: A. $ 850 B. $ 400 C. $ 450 D. $1,150 E. None of the above
Video-Technical, Inc. was organized to sell a single product for $600 per unit, including a 60-day warranty against defects. Engineering estimates indicate that 5% of the units sold will prove defective and require an average repair cost of $50 per unit. During September, total sales were $198,000; 9 units sold during September were found defective and repaired. The accrued liability for product warranties at month-end should be: Select one: a. $ 850 b. $ 400 c. $ 450 d. $1,150 e. None of the above
General Accounting
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An entity sells goods with a warranty covering customers for the cost of repairs of any defects that are discovered within the first two months after purchase. Experience suggests that 60% of the goods sold will have no defects, 25% will have minor defects and 15% will have major defects. If minor defects were detected in all products sold the cost of repairs would be OMR 40,000; if major defects were detected in all products sold, the cost would be RO 200,000. What amount of provision should be made? a.OMR 30,000 b.None of the options c.OMR 40,000 d.OMR 35,000
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