Cameron Bly is a sales manager for an automobile dealership. he earns a bonus each year based on revenue from the number of autos sold in the year less related warranty expenses. actual warranty expenses have varied over the prior 10 years from a low of 3% of an automobile's selling price to a high of 10%. in the past, Bly has tended to estimate warranty expenses on the high end to be conservative. he must work with the dealership's accountant at year-end to arrive at the warranty expense accrual for cars sold each year.

1 Does the warranty accrual decision create any ethical dilemma for Bly?

2 since warranty expenses vary, what percent do you think Bly should choose for the current year?