Exhibit 9-2 In 2015, the Magtag Company sold 16,000 ovens. Magtag estimated that 14% of the machines would require repairs under the two-year assurance-type warranty at an average cost of $60. During 2015, Magtag had an actual outlay of $62,000 for repairs under warranty. Magtag uses the GAAP approach of accruing warranty expense (and the related liability) in the year of the sale. Refer to
Exhibit 9-2. At what amount should the company record warranty expense for 2015?
A) $42,000
B) $62,000
C) $134,400
D) $116,000
C
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Fill in the blank(s) with the appropriate word(s).
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