We are hired as consultants to assist Arctica Co. In accounting for its warranty expenses. Arctica offers a one-year warranty covering parts on each snowmobile it sells. The following Tableau Dashboard is provided to assist us. Estimated Warranty Expense vs. Actual Warranty Claims $25,000 $20,000 Actual Warranty Claims Estimated Warranty Expense $15,000 $10,000 $5,000 SO 4 Years Ago 3 Years Ago 2 Years Ago 1 Year Ago Estimated Warranty Expense Percentage by Model Current Year Sales by Model 896 79 696 Puma 596 Jag 496 396 296 Lynx 196 096 Puma Jag Lynx #tableau - TO 1. Looking at past years, does it appear that Arctica has usually underestimated or overestimated Its warranty liabilities? 2. How would we suggest Arctica change its estimates of warranty liabilities in future periods? 3. Management tells us that Arctica plans to keep estimated warranty expense percentages to a minimum next year. Why might management want to keep these percentages low? 4. Alternatively, assume management Informs us that Arctica had a great year and has very high net Income. However, management is now concerned about high taxes, which are calculated as a percentage of net income. What might management try to do to lower Arctica's taxes? 1 2 Looking at past years, does it appear that Arctica has usually underestimated or overestimated its warranty liabilities? How would we suggest Arctica change its estimates of warranty liabilities in future periods? Why might management want to keep these percentages low? What might management try to do to lower Arctica's taxes? 3