Suppose Radio Shack incurred the following costs at its Atlanta, Georgia, store:

Newspaper advertisements........................................................................... $ 5,100

Payment to consultant for advice on location of new store.......................... $ 2,900

Purchases of merchandise.............................................................................. $ 38,000

Freight- in........................................................................................................ $ 3,100

Salespeople’s salaries..................................................................................... $ 4,800

Depreciation expense on delivery trucks....................................................... $ 1,000

Research on whether store should sell satellite radio service........................ $ 300

Customer Complaint Department................................................................. $ 500

Rearranging store layout................................................................................ $ 850

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. How much are the total inventoriable product costs?