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A Santos & Santos analysts is preparing a presentation on cost drivers at one of its pharmaceutical drug subsidiaries. Unfortunately, both the list of its business functions and the accompanying list of representative cost drivers are accidentally randomized.
The two lists now on the computer screen are:
Business Function Representative Cost Driver
A. Production 1. Minutes of TV advertising time on TV PatrolB. Research and development 2. Number of calls to toll-free customer telephone lineC. Marketing 3. Hours the Alaxan packaging line is in operationD. Distribution 4. Number of packages shippedE. Design of products/ processes 5. Hours spent designing tamper-proof bottlesF. Customer service 6. Number of patents filed with Phil. Patent Office
Problem 1. Match each business function with its representative cost driver.
Problem 2. Give a second example of a cost driver for each business function of Santos & Santos's pharmaceutical drug subsidiary.
Using your own numbers, make up an example to show management the effect of early revenue recognition. Prepare a short report to management explaining the accounts that early revenue recognition would affect.
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