At the Beginning of 2013, Angel Corporation Began Offering a Two-Year

Multiple Choice

At the beginning of 2013, Angel Corporation began offering a two-year warranty on its products. The warranty program was expected to cost Angel 4% of net sales. Net sales made under warranty in 2013 were $180 million. Fifteen percent of the units sold were returned in 2013 and repaired or replaced at a cost of $5.3 million. The amount of warranty expense on Angel's 2013 income statement is:

A) $5.3 million.
B) $7.2 million.
C) $10.6 million.
D) $27.0 million.