Stuart Manufacturing Company $($SMC$)$ was started when it acquired $$93,000$ by issuing common stock. During the first year of operations, the company incurred specifically identifiable product costs $($materials$,$ labor, and overhead$)$ amounting to $$55,900.$ SMC also incurred $$81,700$ of engineering design and planning costs. There was a debate regarding how the design and planning costs should be classified. Advocates of Option $1$ believe that the costs should be classified as general, selling, and administrative costs. Advocates of Option $2$ believe it is more appropriate to classify the design and planning costs as product costs. During the year, SMC made $4,300$ units of product and sold $3,300$ units at a price of $$39\mathrm{.}00$ each. All transactions were cash transactions.