During 2015, Leon Co. incurred the following costs: In Leon's 2015 income statement, research and development expense should be
A) $560,000.
B) $1,035,000.
C) $1,385,000.
D) $1,635,000.

Question

During 2015, Leon Co. incurred the following costs:  In Leon's 2015 income statement, research and development expense should be
A) $560,000. 
B) $1,035,000. 
C) $1,385,000. 
D) $1,635,000.

Quizplus · Accepted Answer

The research and development expense includes the following costs:
- Salaries and wages: $400,000
- Materials and supplies: $80,000
- Depreciation: $320,000
- Contract services: $500,000
- Legal and other professional fees: $85,000
- Other indirect costs: $20,000

Total research and development expense = $400,000 + $80,000 + $320,000 + $500,000 + $85,000 + $20,000 = $1,385,000. Therefore, the correct answer is C.