Accounting: What the Numbers Mean 9th Edition by Wayne W McManus, Daniel F Viele, David H Marshall

Exercise 17

Value chain classifications Match each of the following cost items with the value chain business function where you would expect the cost to be incurred:

Business Function		Cost Item	Answer
a. Research and development b. Design c. Production d. Marketing e. Distribution f. Customer service	1. 2. 3. 4. 5. 6. 7. 8. 9. 10.	Purchase of raw materials Advertising Salary of research scientists Shipping expenses Reengineering of product assembly process Replacement parts for warranty repairs Manufacturing supplies Sales commissions Purchase of CAD (computer-aided design) software Salary of Web site designer	_____ _____ _____ _____ _____ _____ _____ _____ _____ _____

Step 1 of 5

Value chain classifications:

1. The cost of purchase of raw materials is incurred with the value chain business function of production. Therefore, the answer is .

2. The cost of advertising is incurred with the value chain business function of Marketing. Therefore, the answer is .