Cameron Company Sells 2,000 Units of Its Product for

Multiple Choice

Cameron Company sells 2,000 units of its product for $ 500 each in 2021. The selling price includes a one-year warranty on parts. It is expected that 3% of the units will be defective and that repair costs will average $ 100 per unit. In 2021, warranty contracts are honoured on 40 units for a total cost of $ 4,000. What amount should Cameron Company record in 2021 for warranty expense?

A) $ 6,000
B) $ 4,000
C) $ 2,000
D) $ 30,000