Answered: Doctors have long known that aspirin…

Business

Accounting

Doctors have long known that aspirin can lower blood sugar and the amount of insulin in the blood streams of diabetic

Business/Professional Ethics Directors/Executives/Acct

8th Edition

ISBN:9781337485913

Author:BROOKS

Publisher:BROOKS

Chapter5: Corporate Ethical Governance & Accountabililty

Section: Chapter Questions

Problem 3.1EC

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High drug costs are often in the news. Consumer groups contend that the pricing for some drugs (e.g., HIV anti-retrovirals, Betaseron for multiple sclerosis) is too high considering that the cost to manufacture each dose is so low. They talk of price gouging and excessive profits. Pharmaceutical companies defend the prices charged on the basis of research and development costs. They state that the percentage of successful drugs emanating from research efforts is low and that it may take years before a promising drug passes through Food and Drug Administration (FDA) requirements and becomes available for sale. Required: 1. Which cost definition from Exhibit 2.5 is being used by the consumer groups? The pharmaceutical companies? What is included in the cost figures cited by consumer groups? What are the pharmaceutical companies including in their discussion of product cost? Which costs do you think should be included when comparing the cost of a drug with its price? 2. Suppose that you are the accountant for the pharmaceutical company who is charged with the responsibility for compiling costs associated with your newest drug. The cost figures will be used in pricing and to determine profitability of the drug. What costs do you think you would include? Does the IMA Statement of Ethical Professional Practice have any bearing on your choice? Discuss.
Analyze the following statements and categorize them into Determinants of Demand(DD) or Determinants of Supply (DS)._________10. Josh patronize shampoo A rather than shampoo B because of its pricebut a sudden increase in price of shampoo A, also change the mind of Josh which nowchooses shampoo B as a substitute for shampoo A because it is cheaper.
Conrad Coding Institute (CCI) offers online courses in coding. One of CCI's most popular courses is the introductory course that teaches basic coding skills. CCI prices this course aggressively, because of the potential for creating demand for the more advanced (and more profitable) courses. The Introductory coding course has the following price and cost characteristics: Tuition Variable costs (instruction, support, and so on) Fixed costs (advertising, salaries, and so on) Required: 4. Suppose that fixed costs for the year are 15 percent lower than projected, whereas variable costs per swuent are 15 percent higher than projected. What would be the operating profit/loss for the Introductory coding course for the year? Complete this question by entering your answers in the tabs below. Req A Req B Operating profit Req C1 Req C2 $ 65 per student 40 per student 180,000 per year Req C3 Show less
State with a brief reason, the appropriate pricing policy that should be adopted in the following situations. (Do not copy the situation into your answer books) (i) A health centre doing routine health check-up with normal facilities. (ii) A newly formed company is trying to build a unique product that it may patent. Some of the product's components, designed to specifications are outsourced to A. The
please explain why the option is false and other options true in detail with full explanation Sing Manufacturing Company is considering an opportunity to outsource a four functioncalculator that the Company currently makes and sales. Even if the calculator is outsourced,Sing plans to continue to sell it. Also, Sing plans to continue production on other calculatormodels that are currently being made by the Company. The costs associated with making thefour function calculators include unit-level materials, labor, and overhead. In addition, thereis some facility-level overhead costs that are allocated to the product. Sing pays a 5% salcscommission on each calculator sold. Based on this information, indicate which of thefollowing statements is false.a. The materials cost is relevant to the outsourcing decision.b. The facility-level overhead cost is not relevant to the outsourcing decision.C. The sales commission is relevant to the outsourcing decision.d. It may be wise for Sing to…
What is the Maximax Regret method: SA. Using the Minimax Regret decision method list your decision and explain your answer/show your work. FAVORABLE MARKET UNFAVORABLE MARKET ALTERNATIVE ($) ($) Build new computer series 700,000 -580,000 Improve current series 250,000 -85,000 Build new computer series ? Improve current series
The Miramar Company is going to introduce one of three new products: a widget, a hummer, or a nimnot. The market conditions (favorable, stable, or unfavorable) will determine the profit or loss the company realizes, as shown in the following payoff table: a. Compute the expected value for each decision and select the best one. b. Develop the opportunity loss table and compute the expected opportunity loss for each product. c. Determine how much the firm would be willing to pay to a market research firm to gain better information about future market conditions.
1.4 ETHICS CASE: MANAGING COSTS Adapted from Textbook Case 2-32 High drug costs are often in the news. Consumer groups contend that the pricing for some drugs (e.g., HIV anti-retrovirals, Betaseron for multiple sclerosis) is "too high" considering that the cost to manufacture each dose is so low. They talk of price gouging and excessive profits. Pharmaceutical companies defend the prices charged on the basis of research and development costs. They state that the percentage of successful drugs emanating from research efforts is low and that it may take years before a promising drug passes through Food and Drug Administration (FDA) requirements and becomes available for sale. Exhibit 2.7 Understanding Different Cost Definitions VALUE CHAIN COMPONENT COST EXAMPLES MANAGERIAL OBJECTIVE External Financial Reporting • Inventory, cost of goods sold, and gross margin • Operating expenses (aggregated costs) Internal Strategic Analyses • New product development • Pricing decisions • Product mix…
Coyle Pharmaceuticals produces two organic chemicals (Org AB and Org XY) used in the production of two of its most wide-selling anti-cancer drugs. The controller and environmental manager have identified the following environmental activities and costs associated with the two products: Required: 1. Calculate the environmental cost per pound for each product. Which of the two products appears to cause the most degradation to the environment? 2. In which environmental category would you classify excessive use of materials and energy? 3. Suppose that the toxin releases cause health problems for those who live near the chemical plant. The costs, due to missed work and medical treatments, are estimated at 2,025,000 per year. How would assignment of these costs change the unit cost? Should they be assigned?
Regression; choosing among models. Apollo Hospital specializes in outpatient surgeries for relatively minor procedures. Apollo is a nonprofit institution and places great emphasis on controlling costs in order to provide services to the community in an efficient manner. Apollo’s CFO, Julie Chen, has been concerned of late about the hospital’s consumption of medical supplies. To better understand the behavior of this cost, Julie consults with Rhett Bratt, the person responsible for Apollo’s cost system. After some discussion, Julie and Rhett conclude that there are two potential cost drivers for the hospital’s medical supplies costs. The first driver is the total number of procedures performed. The second is the number of patient-hours generated by Apollo. Julie and Rhett view the latter as a potentially better cost driver because the hospital does perform a variety of procedures, some more complex than others. Rhett provides the following data relating to the past year to Julie.…
3-30. CVP Analysis—Ethical Issues Mark Ting desperately wants his proposed new product, DNA-diamond, to be accepted by top management. DNA-diamond is a piece of jewelry that contains the DNA of a partner, spouse, or other loved one. Top management will not approve this product in view of its high break-even point. Mark knows that if he can reduce the fixed costs in his proposal, then the break-even point will be reduced to a level that top management finds acceptable. Working with a friend in the company’s finance department, Mark finds ways to credibly misstate the estimated fixed costs of producing DNA-diamonds below those that any objective person would estimate. Mark knows that if the product is successful (and he is certain that it will be), then top management will not find out about the understatement of fixed costs. Mark believes that this product, once it is successful, will benefit the shareholders and employees of the company. Required Are Mark’s actions ethical? Explain.
3-30. CVP Analysis—Ethical Issues Mark Ting desperately wants his proposed new product, DNA-diamond, to be accepted by top management. DNA-diamond is a piece of jewelry that contains the DNA of a partner, spouse, or other loved one. Top management will not approve this product in view of its high break-even point. Mark knows that if he can reduce the fixed costs in his proposal, then the break-even point will be reduced to a level that top management finds acceptable. Working with a friend in the company’s finance department, Mark finds ways to credibly misstate the estimated fixed costs of producing DNA-diamonds below those that any objective person would estimate. Mark knows that if the product is successful (and he is certain that it will be), then top management will not find out about the understatement of fixed costs. Mark believes that this product, once it is successful, will benefit the shareholders and employees of the company. Are Mark’s actions ethical? Explain.