Answered: Company Pharmaceuticals Poland., has…

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter2: Basic Managerial Accounting Concepts

Section: Chapter Questions

Problem 10MCQ: Stone Inc. is a company that purchases goods (e.g., chess sets, pottery) from overseas and resells...

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Transcribed Image Text:Exercise 4 Company Pharmaceuticals Poland., has been operating in Poland since 1999. It is 100% owned by the Pharmaceuticals Austria". This is a well-known manufacturer of hypertension medications and slimming pills. Pharmaceuticals Ltd was set up in Poland to organize sales of medicines manufactured by Pharmaceuticals Australia" on a polish market. Sales is made directly by the Pharmaceuticals Austria to the wholesalers in Poland, bypassing warehouse of Pharmaceuticals Poland. However, the Pharmaceuticals Poland has its own small warehouse, in which advertising materials small household appliances, pens, articles with company's logos, pens, notebooks with logo) are kept. Those samples are given free of charge to doctors. Stock value ossilate usually around 500.000 PLN. The main activity of the company is therefore: 1) helping to register medicines on the Polish market, 2) marketing on Polish market. This activity must be conducted in accordance with the polish law: corruption is prohibited, and there are also some restrictions toward marketing of more advanced/prescribed drugs. Many medical facilities prohibit visits by sales representatives or designate a strictly limited time visits. The company is based near Warsaw, but in principle most of the staff, that means medical representatives are working outside the office, because their main task is to meet with the doctors and advertise. The company promotes drugs in many ways: meetings with doctors at their worksites and in less formal locations (restaurants, hotels), organizing conferences in Poland and abroad, advertising inTV, newspapers.

The company employs 35 people: President - also acting as Sales Director, Financial Director, Chief
accountant, assistant Accountant, a lawyer dealing with drug registration in Poland, Purchasing
Manager - dealing with all purchases in the company (cars, business phones, administration
materials..), Receptionist /Assistant, and 28 medical representatives" - who are responsible for
promotion in particular regions of Poland.
To do
For the "salary costs" (including remuneration, social security costs, bonuses,) plan:
2 TESTS OF CONTROL, 3 substantive tests OF DETAILS and 2 ANALITICAL TESTS. Write down,
selecting "x" in the appropriate column if particular test gives particular assurance.
Salary costs account for about 50% of all costs incurred by the
Company),
Tests "Remuneration Costs"
Test of control
Test of control
Substantive test
Substantive test
Substantive test
Analytical test
Analytical test
Occurrence
Completeness
Accuracy
Cut-off
Classification
presentation
and

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