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Question(s) / Instruction(s):

A company sells leaf blowers for $170 each. Each unit has a 3 year warranty that covers replacement of defective parts. It is estimated that 4% of all leaf blowers sold will be returned under the warranty at an average cost of $30 each. During October, the company sold 400,000 leaf blowers. 800 leaf blowers were serviced under the warranty during October at a total cost of $25,000. The balance in the Estimated Warranty Liability account on October 1 was $12,500. What is the companys warranty expense for the month of October?

a.            $37,500

b.            $480,000

c.             $25,000

d.            $467,500

e.            $24,000

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