E71 - 5B Morse Company sells automatic can openers under a 15-day warranty for defective merchandise . Based on past experience , Morse estimates that 4%6 of the units sold will become defective during the warranty period . Management Estimates that the average cost of replacing or repairing a defective unit is $16. The units sold and units defective that occurred during the last 2 months of 2017 are as follows . Units Units Defective* Month Sold Prior to December 3 1 November 40,000 GOD December 50,000 30:0 Instructions ( a ) Determine the estimated warranty liability at December 31 for the units sold in Novem - ber and December *