Warranty Reserve is a fund maintained by a manufacturing companies to meet warranty expenses. The warranty reserve balance is the balance left after deductions of claim expenses for the year. The accrual rate is usually a fixed percentage of sales and is managed by the finance department of the company. But it does not need to be that way because warranty reserves are heavily influenced by two aspects in manufacturing: product quality and process consistency as part of new product Introductions. Let’s explore ideas on how to better control these areas.
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