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Tata Motor Company manufactures and sells automobiles, and as part of the purchase price of the car, Tata provides for a manufacturer's assurance warranty for
Tata Motor Company manufactures and sells automobiles, and as part of the purchase price of the car, Tata provides for a manufacturer's assurance warranty for years that covers only the cost of parts needed for any warranty repair. It is estimated that each car will incur parts costs of $ over the year warranty period. In addition, Tata offers a year extended warranty that runs concurrently with the manufacturer's assurance warranty that covers the cost of labor for any needed repairs. This extended warranty is priced at $ Tata estimates that labor costs over the threeyear warranty period will total $ per automobile In its first year of operation, Tata Motor Company sold automobiles at a price of $ each. All customers purchased an extended warranty. Assume all sales occur on January
In Tata's warranty costs were as follows: $ for parts, and $ for labor.
What is the revenue amount recognized on the extended warranty and what is the expense amount recognized for warranty labor in pts
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