Value chain and classification of costs, pharmaceutical company.

(15 minutes) Boots the Chemist incurs the following costs:

a. Cost of redesigning blister packs to make drug containers more tamperproof.

b. Cost of videos sent to doctors to promote sales of a new drug.

c. Cost of a free-phone line used for customer enquiries about usage, side effects of drugs,and so on.

d. Equipment purchased by a scientist to conduct experiments on drugs yet to be approved by the government.

e. Payment to actors on feature to be shown on television promoting new hair-growing product for balding men.

f. Labour costs of workers in the packaging area of a production facility.

g. Bonus paid to a salesperson for exceeding monthly sales quota.

h. Cost of courier service to deliver drugs to hospitals. lo2 REQUIRED Classify each of the cost items in parts a-h into a component of the value chain shown in Exhibit 1-1.