Use the Following Information for Questions 40-42

question 13

Multiple Choice

Use the following information for questions 40-42.
Melman Microscopes Inc. offers a two-year warranty against failure of its products. The estimated liability is 1.5% in the year of sale and 3% in the second year. Sales and actual warranty expense for 2016 and 2017 were:
-The warranty expense for 2017 was

• A) $157,500.
• B) $175,500.
• C) $195,000.
• D) $305,000.

---

Definitions:

Operating Segment

A distinct component of a business engaged in activities generating revenues and incurring expenses, whose results are regularly reviewed by the entity's chief operating decision maker.

Revenue Test

A criterion used to evaluate whether an entity's revenue level meets specific thresholds for financial reporting or regulatory compliance purposes.

Operating Segments

Denotes the distinct revenue-producing components of an enterprise, which engage in business activities from which they may earn revenues and incur expenses.

Reportable

Referring to information or events that must be disclosed or reported according to regulatory, legal, or professional requirements.