The selling price of a new company's units is $20,000 each. The buyers are provided with a 2-year warranty that is expected to cost the company $500 per unit in the year of the sale and $1,500 per unit in the year following the sale. The company sold 160 units in the first year of operation and 200 units in the second year. Actual payments for warranty claims were $40,000 and $260,000 in Years 1 and 2, respectively. The amount charged to warranty expense during the second year of operation is 

a) $100,000 

b) $260,000 

c) $340,000 

d) $400,000

Answer rating: 100% (QA)

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