The research and development portion of SU 9 reviews some of the typical activities that go into research and development such as lab research designed for new discoveries, testing or evaluation of product, engineering to advance designs, and conceptual formulation and design. What does not classify as R&D costs are legal work in connection with patents, routine design of tools, and engineering follow-through in early phases of production. There are of course more activities that are included and excluded in R&D costs. I was somewhat surprised at some of the costs that would and would not be categorized as R&D costs. If a company would put in the R&D to develop a new product or enhance and an existing product and it doesnt work out or product, the results intended. Do those costs then go into sunk costs?