Warranty Costs Brigham Company sells an electric timer that carries a 60-day unconditional warranty against product failure. Based on a reliable statistical analysis, Brigham knows that between the sale and the end of the product warranty period, three percent of the units sold will require repair at an average cost of $88 per unit. The following data reflect Brigham's recent experience: Dec. 31 October November December Total Units sold 18,000 17,000 22,500 57,500 Known product failures from sales in: October 160 275 105 540 November 115 180 295 December 205 205 Calculate the estimated liability for product warranties at December 31. $ (Assume that warranty costs of known failures have already been reflected in the records.)

Warranty Costs Brigham Company sells an electric timer that carries a 60-day unconditional warranty against product failure. Based on a reliable statistical analysis, Brigham knows that between the sale and the end of the product warranty period, three percent of the units sold will require repair at an average cost of $88 per unit. The following data reflect Brigham's recent experience: Dec. 31 October November December Total Units sold 18,000 17,000 22,500 57,500 Known product failures from sales in: October 160 275 105 540 November 115 180 295 December 205 205 Calculate the estimated liability for product warranties at December 31. $ (Assume that warranty costs of known failures have already been reflected in the records.)

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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