Classify each of the cost items (ah) into one of the business functions of the value chain shown in Exhibit 1-2 (p. 28). 1-17 Value chain and classification of costs, pharmaceutical company. Merck, a pharmaceutical company, 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 toll-free telephone line used for customer inquiries about drug usage, side effects of drugs, and so on d. Equipment purchased to conduct experiments on drugs yet to be approved by the government e. Payment to actors for a television infomercial promoting a new hair-growth product for balding men f. Labor costs of workers in the packaging area of a production facility g. Bonus paid to a salesperson for exceeding a monthly sales quota h. Cost of Federal Express courier service to deliver drugs to hospitals
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