Becker, Inc. sells a single product for $450 per unit, including a 90-day warranty against defects. It is estimated that 3% of the units sold will prove defective and require an average repair cost of $35 per unit. During July, 800 units were sold. Five units were reported defective and repaired in July.
What amount should be added to the Estimated Liability for Product Warranties for July?
A) $2,250
B) $ 735
C) $9,450
D) $ 665
E) None of the above

Question

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The Answer of Becker, Inc. sells a single product for $450 per unit, including a 90-day warranty against defects. It is estimated that 3% of the units sold will prove defective and require an average repair cost of $35 per unit. During July, 800 units were sold. Five units were reported defective and repaired in July.
What amount should be added to the Estimated Liability for Product Warranties for July?
A) $2,250
B) $ 735
C) $9,450
D) $ 665
E) None of the above