During 2021, Sunland Co. incurred the following costs:

Testing in search for process alternatives $374000

Costs of marketing research for new product 244000

Modification of the formulation of a process 554000

Research and development services performed by Carla Vista Corp. for Sunland 469000

In Sunland's 2021 income statement, research and development expense should be

$554000.

$1023000.

$1397000.

$1641000.