During 2019, MISTY lab supplied hospitals with a comprehensive diagnostic kit for P120. At a volume of 80,000 kits, MISTY had fixed costs of P1,000,000 and operating income before income taxes of P200,000. Because of an adverse legal decision, MISTY's 2020 liability insurance increased by P1,200,000 over 2019. Assuming the volume and other costs are unchanged, what should be the price per kit in 2020 if MISTY is to make the same P200,000 income before income taxes?
During 2019, MISTY lab supplied hospitals with a comprehensive diagnostic kit for P120. At a volume of 80,000 kits, MISTY had fixed costs of P1,000,000 and operating income before income taxes of P200,000. Because of an adverse legal decision, MISTY's 2020 liability insurance increased by P1,200,000 over 2019. Assuming the volume and other costs are unchanged, what should be the price per kit in 2020 if MISTY is to make the same P200,000 income before income taxes?
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter17: Advanced Issues In Revenue Recognition
Section: Chapter Questions
Problem 6MC
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A. P120
B. P135
C. P150
D. P240
E. Answer Not given
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