During 2010, Eaton Co. introduced a new product carrying a 2-year warranty against defects. The estimated warranty costs related to dollar sales are 2% within 12 months following sale and 4% in the second 12 months following sale. Sales and actual warranty expenditures for the years ended December 31, 2010 and 2011 are as follows: Actual Warranty Sales Expenditures 2010 $ 800,000 $12,000 2011 1,000,000 30,000 $1,800,000 $42,000 At December 31, 2011, Eaton should report an estimated warranty liability of a. $0. b. $10,000. c. $30,000. d. $66,000.