Exciting News About Warranty Expenses!

What is the average cost of repairs over the warranty period?

A. 7% of the sales price

Answer:

The average cost of repairs over the warranty period is 7% of the sales price.

When calculating the estimated product warranty expense, it is important to consider the average cost of repairs over the warranty period. In this case, the average cost is 7% of the sales price. This means that for a product sold for $160,000, the estimated cost of repairs covered by the warranty would be $11,200 (7% of $160,000).

By taking into account this average cost, companies can properly allocate funds for warranty expenses and ensure that they are prepared to cover any necessary repairs or replacements during the warranty period. This helps maintain customer satisfaction and strengthens the company's reputation for standing behind their products.

Overall, understanding the average cost of repairs over the warranty period is crucial for accurate financial planning and management of warranty expenses.