Final answer:
The classification of Ripon Printers' cost items into the value chain functions includes customer service for order forms, production for paper and wood costs, distribution for packing and truck depreciation, marketing for trade show displays, R&D for ink source research, and product design for book sizing.
Step-by-step explanation:
Classifying each cost item of Ripon Printers into the respective business functions of the value chain includes the following:
- a. Cost of customer order forms: This would be classified under (6) customer service as it is part of the service provided to facilitate orders.
- b. Cost of paper used in manufacture of books: This falls under (3) production, as it is a direct material used in creating the product.
- c. Cost of paper used in packing cartons to ship books: This is classified under (5) distribution, as it involves the packaging necessary for delivering the product.
- d. Cost of paper used in display at national trade show: This cost is a part of (4) marketing, specifically for promotional activities.
- e. Depreciation of trucks used to transport books to college bookstores: This is associated with (5) distribution, which involves the logistics of getting the product to the customer.
- f. Cost of the wood used to manufacture paper: This is an input cost for (3) production.
- g. Salary of the scientists attempting to find another source of printing ink: Such a research activity pertains to (1) R&D (Research and Development) for innovation.
- h. Cost of designing the book size so that a standard-sized box is filled to capacity: This activity is part of (2) design of products and processes, as it involves optimizing the product design for efficient distribution.
The above classifications help in understanding how total cost is the sum of all costs involved in the conversion of inputs to outputs in the production process and how this influences the company's profitability and business decisions.