Jamison Company Uses IFRS for Its Financial Reporting $\bullet$ 3,000 Units Were Sold During the Year

Multiple Choice

Jamison Company uses IFRS for its financial reporting. It produces machines that sell globally. All sales are accompanied by a one-year warranty. At the end of the year, the company has the following data: $\bullet$ 3,000 units were sold during the year. $\bullet$ The trend over the past five years has been that 4% of the machines were defective in some way and had to be repaired. Of this 4%, half required a full replacement at a cost of $3,000 per unit and half were able to be repaired at an average cost of $300.What is the expected value of the warranty cost provision?

A) $360,000
B) $198,000
C) $396,000
D) $180,000