Milford Company sells a motor that carries a 60-day unconditional warranty against product failure. Based on a reliable statistical analysis, Milford knows that between the sale and the end of the product warranty period, two percent of the units sold will require repair at an average cost of $150 per unit. The following data reflect Milford's recent experience: Calculate the estimated liability for product warranties at December 31.9 (Assume that warranty costs of known failures have already been reflected in the records.)