A recent study by Tufts University and published in the Journal of Health Economics (2016) estimates that the average cost of developing a new drug and bringing it to market exceeds $2.5 billion. The probability that a new drug makes it through all phases of testing and is approved for medical use is less than 10%. These high costs tend to keep most drug development in the hands of for-profit companies like Merck, the company that developed the first statin drugs for lowering blood cholesterol levels. Discuss the medical and individual costs and benefits of this drug development model.

Kubin company’s relevant range of production is 18,000 to 22,000 units. when it produces and sells 20,000 units, its average costs per unit are as follows: average cost per unit direct materials $ 7.00 direct labor $ 4.00 variable manufacturing overhead $ 1.50 fixed manufacturing overhead $ 5.00 fixed selling expense $ 3.50 fixed administrative expense $ 2.50 sales commissions $ 1.00 variable administrative expense $ 0.50 required: 1. for financial accounting purposes, what is the total amount of product costs incurred to make 20,000 units? 2. for financial accounting purposes, what is the total amount of period costs incurred to sell 20,000 units? 3. for financial accounting purposes, what is the total amount of product costs incurred to make 22,000 units? 4. for financial accounting purposes, what is the total amount of period costs incurred to sell 18,000 units?