In 2020, FJ Inc. sold 120 units of FJ Cruisers for P1.3 million each. The selling price included one-year warranty on parts. It is expected that 5% of the units would be defective and that repair costs would average P155,000 per unit. During 2020, the warranty contracts were honoured on 3 units for a total cost of P375,000. What amount should FJ Inc. accrue on December 31, 2020 for estimated warranty costs?

In 2020, FJ Inc. sold 120 units of FJ Cruisers for P1.3 million each. The selling price included one- year warranty on parts. It is expected that 5% of the units would be defective and that repair costs would average P155,000 per unit. During 2020, the warranty contracts were honoured on 3 units for a total cost of P375,000. What amount should FJ Inc. accrue on December 31, 2020 for estimated warranty costs? P555,000 P930,000 P775,000 P375,000