Use the 2014 Form 10-K for Snap-on Incorporated to complete the requirements below. 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.snapon.com. Be sure to read carefully the following portions of the document:
■ "Item 1. Business" on pages 4-5.
■ "Consolidated Statement of Earnings" on page 61.
Required
a. Calculate the percentage increase in Snap-on's sales and its "earnings from continuing operations" from 2013 to 2014.
b. Would fixed costs or variable costs be more likely to explain why Snap-on's operating earnings increased by a bigger percentage than its sales?
c. On page 68, Snap-on reported that it incurred research and engineering costs of $52.4 million in 2014. 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?