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At the beginning of 2018, SUN Corporation began offering a 2-year warranty on its products. The warranty program was expected to cost STAR 5% of
At the beginning of 2018, SUN Corporation began offering a 2-year warranty on its products. The warranty program was expected to cost STAR 5% of net sales. Net sales made under warranty in 2018 were $180 million. Fifteen percent of the units sold were returned in 2018 and repaired or replaced at a cost of $5.3 million. The amount of warranty expense on STAR's 2018 income statement is:
Select one:
a. $ 5.3 million.
b. $ 27.0 million.
c. $ 7.2 million.
d. $ 9.0 million.
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