Consider the following information from a company's records for 2016:

Materials used in research and development projects$4500

Equipment acquired that will have alternative future uses in future

RD projects for live years1,500

Personnel costs of employees involved in R&D projects5,500

Consulting fees paid to outsiders for R&D projects2,800

Indirect costs reasonably allocable to R&D projects250

Legal fees associated with registration of a patent resulting from a

2016 R&D project2500

Required:

a. Compute the amount of R&D costs that should be classified as expenses in determining

2016 net income.