9/11/02 Prof. Bentz 1
Exercise 1-19
Classify each of the cost items (a –h) into one of the business functions of the value chain chain shown in Exhibit 1- 4 (p. 10)
9/11/02 Prof. Bentz 2
Value Chain
R&D DesignProduc-
tionConsumer
ServiceDistri-bution
Market-ing
Inventoriable product costs
Reimbursable government
contract costs
Decision-relevant costs
9/11/02 Prof. Bentz 3
Classification of Costs
a. Electricity costs for the plant assembling the Presario computer line of products
PRODUCTION
9/11/02 Prof. Bentz 4
Classification of Costs
b. Transportation costs for shipping the Presario line of products to a retail chain.
DISTRIBUTION
9/11/02 Prof. Bentz 5
Classification of Costs
c. Payments to David Kelley Designs for design of the Armada Notebook.
DESIGN
9/11/02 Prof. Bentz 6
Classification of Costs
d. Salary of computer scientist working on the next generation of minicomputers.
RESEARCH
9/11/02 Prof. Bentz 7
Classification of Costs
e. Cost of Compaq employee’ visit to a major customer to demonstrate Compaq’s ability to interconnect with other computers.
MARKETING
9/11/02 Prof. Bentz 8
Classification of Costs
f. Purchase of products of competitors for testing against potential Compaq products.
RESEARCH & DEVELOPMENT
9/11/02 Prof. Bentz 9
Classification of Costs
g. Payments to television network for running Compaq advertisements
MARKETING
9/11/02 Prof. Bentz 10
Classification of Costs
h. Cost of cables purchased from outside suppliers to be used with the Compaq printer.
PRODUCTION
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