At the beginning of 2022, Snowfall Inc. began offering a two-year warranty on its products. The warranty program was expected to cost Snowfall 4% of net sales. Net sales made under warranty in 2022 were $210 million. Fifteen percent of the units sold were returned in 2022 and repaired or replaced at a cost of $4.70 million. The amount of warranty expense on Snowfall's 2022 income statement is: