Radio Hut Inc. offers a two-year assurance warranty against failure of its products. The estimated liability is 1.5% in the year of sale and 3% in the second year. Sales and actual warranty expense for 2020 and 2021 were:

Sales Actual Warranty Costs Incurred During Year

2020 $3,500,000 $110,000

2021 $3,900,000 $195,000

The warranty expense for 2021 was

A) $157,500.

B) $175,500.

C) $195,000.

D) $305,000.