Benson Manufacturing Company (BMC) was started when it acquired $96,000 by issuing common stock. During the first year of operations, the company incurred specifically identifiable product costs (materials, labor, and overhead) amounting to $55,900. BMC also incurred $68,800 of engineering design and planning costs. There was a debate regarding how the design and planning costs should be classified. Advocates of Option 1 believe that the costs should be classified as general, selling, and administrative costs. Advocates of Option 2 believe it is more appropriate to classify the design and planning costs as product costs. During the year, BMC made 4,300 units of product and sold 3,400 units at a price of $38.00 each. All transactions were cash transactions.

Prepare a GAAP-based income statement for Option 1.

BENSON MANUFACTURING COMPANY
Income Statement
	0
	$0

Balance Sheet
Assets
Total assets	$0
Equity
Total equity	$0