Wholly Donuts Ltd is a medium-sized doughnut manufacturer.

1. Apply value chain and other classifications to the costs listed below. (More than one classification may be appropriate for each cost item.)

Cost classification:

(a) Research and development

(b) Design

(c) Supply

(d) Production

(e) Marketing

(f) Distribution

(g) Customer service

(h) Direct material

(i) Direct labour

(j) Manufacturing overhead

(k) Selling and administrative expenses

(l) Other (if other, explain).

Costs:

1. Flour

2. Depreciation on cooking vats

3. Cooking oil

4. Sugar

5. Wages of a doughnut week

6. Repair costs of a cooking vat

7. Packaging for doughnuts

8. Cartoons for shipping doughnuts

9. The accountant’s salary

10. The accountant’s manager’s salary

11. Advertising

12. Oil for the factory conveyor system

13. Fuel the delivery truck used to ship doughnuts to customers

2. Do you think these costs cover the complete value chain for Wholly Donuts? Explain your answer.



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