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ABC Company began offering a three-year warranty on its products at the beginning of 2022....

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Accounting

ABC Company began offering a three-year warranty on its products at the beginning of 2022. The warranty program was expected to cost Heinrich 7% of net sales. Net sales made under warranty in 2022 were $183 million. Twelve percent of the units sold were returned in 2022 and repaired or replaced at a cost of $4.40 million. How much warranty expense should Heinrich report in its 2022 income statement?

$12.81 million.

$27.45 million.

$4.40 million.

$16.21 million.

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