Question

Solivan Corp. incurred the following costs during the current year:

Construction of preproduction prototypes $180,000
Testing in search of process alternatives 110,000
Design of tools, jigs, molds, and dies involving new technology 115,000
Engineering follow-through in an early phase of commercial production 80,000
Seasonal or other periodic changes to existing products 105,000

In its income statement, Solivan should report research and development expense of:________

a. $295,000
b. $370,000
c. $405,000
d. $375,000

Answer 1

c. $405,000

Step-by-step explanation:

Calculation of R$D Expenses to be report in Income statement

Construction of pre-production prototypes $180,000

Testing in search of process alternatives $110,000

Design of tools, jigs, molds, and dies $115,000

involving new technology

Total R&D Expenses $405,000

Note: Engineering follow-through in an early phase of commercial production & Seasonal or other periodic changes to existing products are excluded from calculation of Research and Development Expenses.