Use the 2017 Form 10-K for Stanley Black & Decker, Inc. to complete the following requirements. To obtain the Form 10-K, you can use the EDGAR system (see Appendix A at the back of this text for instructions), or it can be found under “Corporate” and “Investor Information” on the company’s corporate website at www.stanleyblackanddecker.com. Be sure to read carefully the following portions of the document:

■ “Item 1. Business” on pages 3–4.

■ “Consolidated Statement of Operations” on page 57.

Required

a. Calculate the percentage increase in Stanley’s sales and its “earnings from continuing operations” from 2016 to 2017.

b. Would fixed costs or variable costs be more likely to explain why Stanley’s operating earnings increased by a bigger percentage than its sales?

c. On page 99, Stanley reported that it incurred research and development costs of $252.3 million in 2017. If this cost is thought of in the context of the number of units of products sold, should it be considered as primarily fixed or variable in nature?

d. If the research and engineering costs are thought of in the context of the number of new products developed, should they be considered as primarily fixed or variable in nature?