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Question - Adorable Company owns a car dealership that it uses for servicing a car under warranty. The company's past experience with warranty claims is as follows: 50% of the cars sold in a year have zero defect, 30% of the cars sold in a year have normal defect, and 20% of the cars sold in a year have significant defect. The cost of rectifying the normal defect is 10,000 while the significant defect is 30,000. The company sold 500 cars in 2021. How much is the amount of provision for warranty in 2021?
Financial Statement Analysis and Preparation
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