Grouper Ltd. manufactures a line of amplifiers that carry a three-year warranty against defects. Based on experience, the estimated warranty costs related to dollar sales are as follows: first year after sale, 2%; second year after sale, 5%; and third year after sale, 8%. The company's sales and actual warranty expenditures for the first three years of operation are:
a) Sales: $1,000,000; Actual warranty expenditures: $25,000
b) Sales: $1,500,000; Actual warranty expenditures: $30,000
c) Sales: $2,000,000; Actual warranty expenditures: $45,000
d) Sales: $2,500,000; Actual warranty expenditures: $50,000
