Solar Plc sells their frequency counters to various customers.

1) In contract X with the customer, Solar promises to deliver 50 frequency counters for a total

price of 300,000.

There is also a clause about free repair and maintenance service within three years after

purchase.

2) In contract Y with the customer, Solar promises to deliver 25 frequency counters for a total

price of 150,000.

The contract does not include any warranty promises. However, it is well-known that Solar has

provided one-year free repair service in the past.

One particular Product Z, one type of electric board, is sold with a six-month manufacturers

warranty. Solar Plc also offers customers the option to purchase an extended warranty on

Product Z. Under the extended warranty, Solar Plc will repair products that become defective

within 24 months from the date the manufacturers warranty ends. Product Z is sold for 530

per unit. A customer can purchase Product Z plus the extended warranty at a combined price

of 610. As at 30 September 2021, Solar Plc estimates, based on its past experience and the

number of units of Product Z sold in 2021, that costs of 18,000 will be incurred to repair

products that become defective within six months of their sale.