Suppose Motor Shack incurred the following costs at its Ann Arbor, Michigan, store:

Requirements:-

1. Classify each cost as to which category of the value chain it belongs (R&D, Design, Purchases, Marketing, Distribution, or Customer Service).
2. Compute the total costs for each value chain category.
3. What are total product costs?
4. What are total period costs?

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Newspaper advertisements..... $ 5,100 Payment to consultant for advice on location of new store. $ 2,700 Purchases of merchandise............. $ 37,000 Freight-in.......... $ 3,700 Salespeople's salaries. $ 4,600 Depreciation expense on delivery trucks. $ 1,500 Research on whether store should sell satellite radio service............ $ 250 Customer Complaint Department. $ 550 Rearranging store layout......... $ 650