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Cool Ltd manufactures goods which are sold with one-year warranty against defects. (a) Should a provision be recognised for the cost of repairing faulty goods?
Cool Ltd manufactures goods which are sold with one-year warranty against defects. (a) Should a provision be recognised for the cost of repairing faulty goods? (b) Cool Ltd's sales for the year are $40m. They anticipate that 60% of goods will not be faulty, 30% will need minor repairs (which would cost $2m to repair if they affected all the items) and 10% of goods will need major repairs (which would cost $4m to repair if they affected all the items). How much should be provided for repairs
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