I need help getting the answer to these four questions

Managerial accounting problems Question #1. High drug costs are often in the news. Consumer groups contend that the pricing for some drugs is \"too high\" considering that the costs to manufacture each dose in so low. They talk of price gouging and excessive profits. Pharmaceutical companies defend the price charged on the basis of nonmanufacturing costs such as research and development and others. The following is a generic value chain for a pharmaceutical firm: 1. Which cost definition is being used by the consumer groups? The pharmaceutical companies? 2. Which cost do you think should be included when comparing the cost of a drug with its price? 3. If you were working as an executive for a pharma firm, how would you use the value chain to prepare a defense on your pricing practices? 4. How could you use the information supplied by the value chain to improve the profitability of the firm when prices are set by the market? Give a real life example on how to approach this problem (for the pharma industry) from a management perspective. Question 2. CVP analysis with Changing Cost Structure Billot Telephone was formed in the 1940s to bring telephone services to remote areas of the US Midwest. The early equipment was quite primitive by today's standards. All call were handled manually by operators, and all customers were on party lines. By the 1970's, however, all customers were on private lines, ad mechanical switching devices handled routine local and long distance calls. Operators remained available for directory assistance, credit card calls and emergencies. In the 1990s Billot Telephone added local internet connections as an optional service to its regular customers. It also established an optional cellular service, identified as Home Ranger. 1. 2. Using a unit level analysis, develop a graph with two lines representing Billot's cost structure. Be sure to label the axes and lines o In the 1940s o In the late 1990s With sales revenues as the independent variable, what is the likely impact of the changed cost structure on Billot's: o Contribution Margin Percent o Break Even Point 3. Discuss how the change in the cost structure affected Billot's operating leverage and how this affects profitability under rising or falling sales scenarios. 4. Provide 3 specific managerial decisions that can have an impact on the degree of operating leverage of a firm. Question 3. The Lawn Company provides commercial landscaping services in San Diego. The firm's owner wants to develop cost estimates that she can use to prepare bids on jobs. After analyzing the firm's costs, she has developed the following preliminary cost estimates for each 1000 square feet of landscaping: Direct Materials $390 Direct Labor (5 hours at $11 per hour) $ 55 Overhead ($18 per direct labor hour) $ 90 Total cost per 1000 square feet $535 She is quite certain about the estimates for direct materials and for labor. However, she is not as comfortable with the overhead estimate. The estimate of $18 per direct labor hour was determined by dividing the total overhead for the 12month period ($1,296,000) by the total direct labor hours (72,000). By using a regression of overhead on direct labor hours the following cost formula was obtained: Overhead = $52,400 + $9.25 DLH 1. The overhead developed from the least square regression is different from her preliminary estimate of $18 per direct labor hour. Explain the difference in the two overhead rates 2. Prepare a bid for a 50,000 square feet project under both cost formulas. 3. Which one would you recommend to be used for the project? 4. If management does not feel comfortable with the fixed/variable cost relationship that currently exists, could she do something about it? Come up with a managerial recommendation on how to deal with this situation? 5. How far can a manager go into changing the microeconomics of a firm (i.e. Fixed to Variable costs ratio). Is there an industry effect that determines that ratio? 6. Amazon's Inc. success can hardly be questioned. How does Amazon's strategy relate to this question? A sentence describing assumptions for the bid in 3.2 has been added, which is: "Assume that the 50,000 sq ft job would use a month time of capacity and that the monthly fixed overhead is $52,400/12." Question #4. The budgeted costs for Connor Company for direct materials, direct production labor and direct distribution labor are $40, $8 and $12, respectively. The vicepresident is deeply satisfied with the following performance report: Real Costs Master Static Budget Variation Direct Materials $364,000 $400,000 $36,000 F DL Production 78,000 80,000 2,000 F DL Distribution 110,000 120,000 10,000 F The real number of units produced was 8,000. a. Prepare a performance evaluation report that uses a flexible and a static budget. Please assume that all the costs are variable. (The variance analysis detail is not required for this question). b. Is the vicepresident's satisfaction justified (answer after you complete part a.)? Note: View a PDF version of this problems solutions