Suppose Super Tires estimates that warranty costs will equal 1 percent of tire sales. Assume that November tire sales totalled \(\$ 900,000\), and the company's outlay in replacement tires and cash to satisfy warranty claims was \(\$ 7,400\). How much warranty expense should the November income statement report?

a. \(\$ 1,600\)

b. \(\$ 7,400\)

c. \(\$ 9,000\)

d. \(\$ 16,400\)