Lucky Cow Dairy provided the following expense information for May: Assembly-line workers' wages

$72,000

Caps for milk bottles

3,000

Reconfiguring the assembly line

125,000

Customer support hotline

10,000

Delivery expenses

20,000

Depreciation on factory equipment

75,000

Plastic milk bottles

52,000

Salaries of salespeople

63,000

Salaries of research scientists

70,000

Customer toll-free order line

6,000

1. What is the total cost of research and development of the value chain?

2. What is the total cost for the production category of the value chain?

3. What is the total cost for the distribution category of the value chain?

4. What is the total cost for the marketing category of the value chain?

5. What is the total cost for the customer service category of the value chain?

Expert Answer

1. $70,000

2. $202,000

3. $20,000

4. $69,000

5. $10,000

Explanation:

1. What is the total cost of research and development of the value chain?

The answer is $70,000. This is the salaries of research scientists that we have been given in the question. Salaries of research scientist is part of the total cost of research and development of the value chain.

2. What is the total cost for the production category of the value chain?

This can be gotten by adding the value of the assembly line workers wages, the caps for milk bottle, the depreciation on factory equipments and the plastic milk bottles. This will be:

= $72000 + $3000 + $75000 + $52000

= $202,000

3. What is the total cost for the distribution category of the value chain?

This can be seen in the question provided as delivery expenses is $20,000.

4. What is the total cost for the marketing category of the value chain?

This will be the salaries of the salespeople and the customer toll free order line. This will be:

= 63000 + 6000

= $69000

5. What is the total cost for the customer service category of the value chain?

The total cost for the customer service category of the value chain will be the value of the customer support hotline which is $10,000.

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