When funding is allocated, the type of research (ie. which tech tree) to be conducted must be specified. All RP from that Outpost this turn will go toward the selected tech tree. The only exceptions are Science Modules on bases. They operate at 1EP per Lab box, and generate 1dX RP (where X is the number of funded Lab boxes not destroyed during the turn), which may be allocated freely and individually. They may, however not be used for any other purpose while funded in this manner.
You may also allocate funding towards Starship Design. In this case, each undestroyed Lab box produces 2RP (1RP per box for Science Modules) in General Starship Design. This eventually results in blueprints for more advanced ships, starting (for most races) with the Heavy Cruiser designs that most other classes are based on, and continuing to your choice of Light Cruiser, Destroyer, Frigate, Fleet Tug, or Dreadnought. Battleships are based on enlarged Dreadnought hulls, so you must have a Dreadnought prototyped before development can begin on a Battleship.
New designs must be prototyped before they can go into full production. A prototype takes one extra turn to complete, and costs 1.5 times its normal cost. This reflects the fine tuning and working out of bugs, and results in a ship identical to a production model. Production models may begin before the prototype is finished, but may not be completed until one turn after the prototype is completed.
Bases and pods are exempt from all prototyping, but not design rules. Variants on an existing hull require 15RP in Starship Design and do not require prototyping (assuming that the basic design has already been prototyped).