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

Exercise 23

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. b. c. d. e. f.	Research and development Design Production Marketing Distribution Customer service	1. 2. 3. 4. 5. 6. 7. 8. 9. 10.	Labor time to repair products under warranty TV commercial spots Labor costs of filling customer orders Testing of competitor’s product Direct manufacturing labor costs Development of order tracking system for the Internet Printing cost of new product brochures Hours spent designing childproof bottles Training costs for representatives to staff the customer call center Installation of robotics equipment in manufacturing plant	_____ _____ _____ _____ _____ _____ _____ _____   _____

Step 1 of 2

Visual chain analysis:

It is a process of identifying the internal activities and processes that a firm engages in to produce its final product. These activities are then analyzed to find ways to reduce costs and increase value.