A manufacturer of audio equipment offers a warrant to remedy manufacturing defects, at no cost to the customer, if identified within six months of sale, but customarily has extended this facility for up to nine months. During the year to 31 December 2012 the sales, made evenly through the year, amounted to £24 million. Past experience has been that around 5% of items sold return for remedial treatment and remedial work costs, on average, 3% of sale price. How should the manufacturer report its obligation for remedying manufacturing defects as at 31 December 2012?

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a £27,000 b £18,000 c d as a liability as a liability £27,000 as a provision £18,000 as a provision