Compaq Computer incurs the following costs:

a. Electricity costs for the plant assembling the Presario computer line of products.

b. Transportation costs for shipping the Presario line of products to a retail chain.

c. Payment to David Kelley Designs for design of the Armada Notebook.

d. Salary of computer scientist working on the next generation of minicomputers.

e. Cost of Compaq employees’ visit to a major customer to demonstrate Compaq’s ability to interconnect with other computers.

f. Purchase of competitors’ products for testing against potential Compaq products.

g. Payment to television network for running Compaq advertisements.

h. Cost of cables purchased from outside supplier to be used with Compaq printers.

Required

Classify each of the cost items (a– h) into one of the business functions of the value chain shown in Exhibit.

Administration

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Research and Design of Products and Production Marketing Distribution Customer Service DevelopmentProcesses