There is a failure in the company\'s backup system after a system crash. Month-e

Question

There is a failure in the company's backup system after a system crash. Month-end reports will be delayed. Mark, the manager of the division experiencing the system failure, does not report this upcoming delay to anyone since he does not want to be the bearer of bad news. To reduce the company's tax bill, Jillian uses total cost to value inventory instead of using product cost as required by law. Since Michael works in the accounting department, he is aware that profits are going to fall short of analysts' projections. He tells his father to sell stock in the company before the earnings release date. Classify each cost as to which category of the value chain it belongs (R&D;, Design, Purchases, Marketing, Distribution, or Customer Service). Compute the total costs for each value chain category. How much are the total inventoriable product costs?

Explanation / Answer

Cost R&D Design Purchases Marketing Distribution Customer Service Newspaper advertisements 5,100 Payment to consultant for advice on location of new store 2,900 Purchase of merchandise 38,000 Freight In 3,100 Salespeople's salaries 4,800 Depreciation expense on delivery Truck 1,000 Rsearch on whether store should sell 300 Customer Complaint Department 500 Rearranging store layout 850 Total 3,200 850 41,100 5,100 5,800 500 Total Invetoriable Product Cost = 41,100

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