Final Exam Review

Problem$1.$ E$2-31$B Classify costs along the value chain for a manufacturer $(5$ points$)$

Suppose the smartphone manufacturer Sabre Electronics provides the following information for its costs last month $($in millions$)$:

Delivery expense to customers via UPS $$10$

Salaries of salespeople $$6$

Chipset $($the set of chips used on a phone$$s

motherboard$)$ $$60$

Exterior case for phone $$4$

Assembly$-$line workers$$ wages $$12$

Technical customer$-$support hotline $$5$

Depreciation on plant and equipment $$65$

Rearrange production process to accommodate

new robot $$1$

$1-800($toll$-$free$)$ line for customer orders $$3$

Salaries of scientists who developed new model $$11$

Requirements

$1.$ Classify each of these costs according to its place in the value chain $($R&D$,$ Design,

Production, Marketing, Distribution, or Customer Service$).$

$2.$ Within the production category, break the costs down further into three subcategories:

Direct Materials, Direct Labor, and Manufacturing Overhead.

$3.$ Compute the total costs for each value chain category.

$4.$ How much are the total product costs?

$5.$ How much are the total prime costs?

$6.$ How much are the total conversion costs?