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Question - Tyremart Inc provides a two-year warranty on winter tyres it manufactures below are the excerpts for Dec 2020
Sales 50,000 units
Sales $200 per unit
Historical trend is estimated to be 3% defect rate on sales
Replacement cost is determined to be 120,000
Warranty obligation as of Nov 2020 was $130,000
Required - What is the warranty Expense for Dec 2020?
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