CrayZ Wheels manufactures kick scooters. The company offers a one-year warranty on all scooters. During...
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CrayZ Wheels manufactures kick scooters. The company offers a one-year warranty on all scooters. During 2018, the company recorded net sales of $1,500 million. Historically, about 4% of all sales are returned under warranty and the cost of repairing or replacing goods under warranty is about 40% of retail value. Assume that at the start of the year, CrayZ Wheels' balance sheet included an accrued warranty liability of $16 million and at the end of the year, the accrued warranty liability balance was $12 million. There were no recalls or changes to pre-existing warranty liabilities during the period. What was CrayZ Wheels' reported warranty expense for 2018?
Question 7 options:
A)
$36 million
B)
$256,000
C)
$192,000
D)
$24 million
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