During 2020, in its first year of operations, Bennett Co. Introduced a new line of...
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During 2020, in its first year of operations, Bennett Co. Introduced a new line of machines that carry a three-year warranty against manufacturer's defects. Based on industry experience, warranty costs are estimated at 2% of sales in the year of sale, 4% in the year after sale, and 6% in the second year after sale Sales were 58,600,000 and $9,500,000 in 2020 and 2021, respectively. Actual warranty expenditures were $165,000 and $484.000 in 2020 and 2021, respectively. During 2021, Bennett's warranty iability: Multiple Choice O increases by $50,000 0 o increases by $656,000 0 Decreases by $228,000 0 0 O Decreases by $294.000
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