Question: Hully grants a one-year warranty for each processing machine sold. Past experience indicates that the costs of satisfying warranties are approximately 2% of sales. During

Hully grants a one-year warranty for each processing machine sold. Past experience indicates that the costs of satisfying warranties are approximately 2% of sales. During 2020, sales of processing machines totalled RM21,300,000, 2020 expenditure for warranty repair costs were RM178,000 related to 2020 sales and RM220,000 related to 2019 sales. The January 1, 2020 balance of the warranty liability was RM250,000.

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