Question
Bronkey Alazma Inc. manufactures thought glasses (a creepy device that records the thoughts of people who look your eyeglasses). The products cost $60 to manufacture
Bronkey Alazma Inc. manufactures thought glasses (a creepy device that records the thoughts of people who look your eyeglasses). The products cost $60 to manufacture and sells for $500 each. On January 1, 2021, Bronkey Alazma Inc.s trial balance reported a $3,480 credit balance in its Allowance for Warranties liability account, representing its liability for estimated repairs on thought glasses sold through December 31, 2020.
Under the terms of its customer sales contract, Bronkey agrees to replace any device that fails within one year of sale. Based on its experience, Bronkey estimates that 4 percent of the devices that it sells during a year will need to be replaced.
During 2021, Bronkey sold 12,000 of the devices and replaced 270 defective devices (each costing $60 per unit). Of the 270 replacement devices, 71 relate to sales made during 2020 and 199 relate to sales made during 2021.
Ignoring any shipping and handling costs, what is Bronkeys warranty expense for the year ended December 31, 2021? (Hint: Do not use any dollar signs or comma in your answer).
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