Ravenna Cola produces a lemon-lime soda. The production process starts with workers mixing thelemon syrup and lime flavors in a secret recipe. The company enhances the combined syrup withcaffeine. Finally, the company dilutes the mixture with carbonated water. Ravenna Cola incurs thefollowing costs (in thousands):Plant janitors' wages $1,100Delivery truck drivers' wages $305Payment for new recipe $1,260Depreciation on delivery trucks $250Plant utilities $450Lime flavoring $ 820Rearrangement of plant layout $ 1,600Bottles $ 1,040Salt $ 50Sales commissions $425Production costs of "cents-off" store coupons for customers $800Lemon syrup $18,000Replacement of products with expired dates upon customer complaint $30Depreciation on plant and equipment $ 3,400Wages of workers who mix syrup $ 8,300Customer hotline $210Freight-in on materials $ 1,100RequirementsClassify each of the listed costs according to its category in the value chain (R&D, Design, Production,Marketing, Distribution, or Customer Service).

Further break down production costs into three subcategories: Direct Materials (DM), Direct Labor (DL),or Manufacturing Overhead (MOH).Compute the total costs for each value chain category.How much are the total product costs?Suppose the managers of the R&D and design functions receive year-end bonuses based on meetingtheir unit's target cost reductions. What are they likely to do? How might this affect costs incurred inother elements of the value cha