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D. Scully, Inc. manufactures home surveillance systems and provides a one-year warranty for all products sold. The warranty is an integral part of the sale.
D. Scully, Inc. manufactures home surveillance systems and provides a one-year warranty for all products sold. The warranty is an integral part of the sale. The company estimates that the warranty cost is $220 per unit sold. If during 2023, the company sold 25,000 units for a total revenue of $30 million and paid warranty claims of $4.5 million, what amount of warranty expense would the company recognize for the year-ended December 31, 2023?
a. $10 million b. $4.5 million c. $5.5 million d. $1 million
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