Specialty Appliances andMore, Inc.(SAM) has athree-year warranty on their solar refrigerators for defects. Warranty costs are estimated at2% of sales in year one(the year of thesale), and5% of sales in each of the following two years. The warranty expires at the end of the third year. Annual sales and actual warranty repair costs were asfollows:

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(Click the icon to view the sales and actual warrantycosts.)

What total amount should SAM record as warranty expense in the first threeyears?

A.

$126,000

B.

$75,000

C.

$51,000

D.

$93,000

Click to select your answer.

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Data Table

Sales

Actual Warranty Cost

Year 1

$

275,000

$

27,500

Year 2

$

350,000

$

17,500

Year 3

$

425,000

$

30,000

$

1,050,000

$

75,000

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