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Expedition Corp offers a one-year warranty against defects on the products it sells. In 2024, the company sold $5,400,000 of its most popular product and
Expedition Corp offers a one-year warranty against defects on the products it sells. In 2024, the company sold $5,400,000 of its most popular product and Expedition also sold a total of $90,000 in extended service-type warranties on these products. The extended warranties are expected to be utilized 30% in 2025, 25% in 2026, and 45% in 2027. Based on their historical experience with this product warranty costs are expected to be approximately 3,0% of sales. During 2024, the assurance-type warranty on all prior years sales expired (since it lasts one year, and the company made repairs on items sold during 2024 of 585,000. The remaining repairs are expected to occur in 2025. The costs of servicing the extended warranties is expected to be $14,000 across all three years. What is the effect on Expedition's income before tax of the assurance-type warranties in 2024? (Enter increases in income as a positive number and decreases as a negative number) $ What is the effect on Expedition's income before tax of the service-type warranties expected to be in 20257 $
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