Specialty Appliances and More, Inc. ( SAM) has a three- year warranty on their solar refrigerators for defects. Warranty costs are estimated at 2% of sales in year one ( the year of the sale), and 5% 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 as follows:

What total amount should SAM record as warranty expense in the first three years?
a. $ 51,000
b. $ 75,000
c. $ 93,000
d. $ 126,000

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Year Year 2 Year 3 Sales 275,000 S 350,000 S 425,000 $1,050000 Actual Warranty Cost S 27500 S 17500 $30,000 $75,000