IFRS Multiple Choice Question 07

Sunland Company uses IFRS for its financial reporting. It produces machines that sell globally. All sales are accompanied by a one-year warranty. At the end of the year, the company has the following data:

5100 units were sold during the year.

The trend over the past five years has been that 3% of the machines were defective in some way and had to be repaired. Of this 3%, half required a full replacement at a cost of $2800 per unit and half were able to be repaired at an average cost of $280.

What is the expected value of the warranty cost provision?