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2.4 Adelaide (Pty) Ltd sells goods with a warranty which covers the cost of repairs for any defects in itsgoods within the first 12 months

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2.4 Adelaide (Pty) Ltd sells goods with a warranty which covers the cost of repairs for any defects in itsgoods within the first 12 months of purchase. Past experience and future expectations indicate the following pattern of the probable of repairs. % of goods sold Nature of defects Cost of repairs if all items have defects 80% No defects Nil 15% Minor defects R750 000 5% Major defects R2 500 000 Required Calculate the provision for warranty repairs using the expected value method (6)

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