Cost drivers and the value chain. AJohnson & Johnson analyst is preparing a presentation on cost drivers at its pharmaceutical drug subsidiary. Unfortunately, both the list of its busi¬

ness function areas and the accompanying list of representative cost drivers are accidentally randomized. The two lists now on the computer screen are as follows:

Business Function Area A. Production B. Research and development C. Marketing D. Distribution E. Design ofproducts/processes F. Customer service Representative Cost Driver 1. Minutes oftelevision advertising time 2. Number of calls to toll-free customer phone line 3. Hours Tylenol packing line in operation 4. Number of packages shipped 5. Hours spent designing tamper-proof bottles 6. Number of patents filed with government agency Required 1. Arrange the business functions into a logical value-chain sequence and then match each business function area with its representative cost driver.

2. Give a second example of a cost driver for each of the business functions ofJohnson &

Johnson’s pharmaceutical drug subsidiary.