Sam's Pharma manufactures drugs for hospitals. Sam also outsources drugs from Asia if the drugs are cheaper than production costs of his own. The following cost information are provided: + Drug A Drug B Drugs Production (in Units) Direct material (per unit) Direct labor (per unit) Variable overhead (per unit) Fixed cost (per unit) Selling price (per unit) 4 Imported price J Required 20,000- $ 0.80 3 1.60- 0.40 0.80 4.00 2.75 40,000+ $1.00- 2 1.80 0.60 1.00- 5.000 4.20 a. Calculate the profit assuming that the company will produce all the drugs by itself. b. Based on cost only, any drug will be recommended for outsource? c. How would your recommendation affect profit? By how much? d. What factors would be considered by the management about outsourcing? Drug C 80,000+ $ 0.40 4 0.80 0.20 0.40- 2.000 2.00- 5 12 P P P5 12 25