Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Responsibility Accounting Background: There is a well known secret in the accounting world regarding Research and Development costs in the Pharmaceutical Industry. R&D costs under

Responsibility Accounting

Background: There is a well known "secret" in the accounting world regarding Research and Development costs in the Pharmaceutical Industry. R&D costs under GAAP must be expensed every month (as oppose to capitalizing them as IFRS does). As such, companies are getting hit on their Net Income (profit) figure month after month until a drug reaches the market. All of this translates into high prices for new drugs (costs passed on to the consumer for a number of years) until companies basically get their investment back (the lower taxes they paid during past years do not compensate for the impact on profit).

Based on the principles of Responsibility Accounting, what type of Performance Evaluation System will you institute as a manager in a pharmaceutical business? Your suggest what would work but also what will not work and why (general statements like "I will make sure that a short term focus is avoided" will not be accepted).

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

The Why And How Of Auditing Auditing Made Easy

Authors: Charles B. Hall

1st Edition

0578519739, 978-0578519739

More Books

Students also viewed these Accounting questions

Question

Build positive relationships with employees and co-workers.

Answered: 1 week ago

Question

Suppose we have a robot which moves around in a 1D world

Answered: 1 week ago