Chapter 1, Problem 1.17E

Value chain and classification of costs, computer company. Dell Computer incurs the following costs:

1. a. Utility costs for the plant assembling the Latitude computer line of products
2. b. Distribution costs for shipping the Latitude line of products to a retail chain
3. c. Payment to David Newbury Designs for design of the XPS 2-in-1 laptop
4. d. Salary of computer scientist working on the next generation of servers
5. e. Cost of Dell employees’ visit to a major customer to demonstrate Dell’s ability to interconnect with other computers
6. f. Purchase of competitors’ products for testing against potential Dell products
7. g. Payment to business magazine for running Dell advertisements
8. h. Cost of FedEx courier service to deliver drugs to hospitals

Classify each of the cost items (a–h) as one of the business functions of the value chain shown in Figure 1-2 (page 5).