HW1 - 2-23 Cost drivers and the value chain. 2. Business...

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Unformatted text preview: 2-23 Cost drivers and the value chain. 2. Business Function Research and development Design of products/processes Production Marketing Distribution Customer service 2-31 • • • • • • • • • • • • Representative Cost Driver Hours of laboratory work Number of new drugs in development Number of focus groups on alternative package designs Hours of process engineering work Number of units packaged Number of tablets manufactured Number of promotion packages mailed Number of sales personnel Weight of packages shipped Number of supermarkets on delivery route Number of units of a product recalled Number of personnel on toll-free customer phone lines Income statement and schedule of cost of goods manufactured. Howell Corporation Income Statement for the Year Ended December 31, 2007 (in millions) Revenues Cost of goods sold: Beginning finished goods, Jan. 1, 2007 Cost of goods manufactured (below) Cost of goods available for sale Ending finished goods, Dec. 31, 2007 Gross margin Marketing, distribution, and customer-service costs Operating income $950 $ 70 645 715 55 660 290 240 $ 50 Howell Corporation Schedule of Cost of Goods Manufactured for the Year Ended December 31, 2007 (in millions) Direct materials costs: Beginning inventory, Jan. 1, 2007 Purchases of direct materials Cost of direct materials available for use Ending inventory, Dec. 31, 2007 Direct materials used Direct manufacturing labor costs Indirect manufacturing costs: Indirect manufacturing labor Plant supplies used Plant utilities Depreciation––plant, building, and equipment Plant supervisory salaries Miscellaneous plant overhead $ 15 325 340 20 $320 100 60 10 30 80 5 35 220 Manufacturing costs incurred during 2007 Add beginning work-in-process inventory, Jan. 1, 2007 Total manufacturing costs to account for Deduct ending work-in-process, Dec. 31, 2007 Cost of goods manufactured 640 10 650 5 $645 ...
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HW1 - 2-23 Cost drivers and the value chain. 2. Business...

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