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 2020o 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 2020o 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 13E: On March 1, 2019, Elkhart enters into a new contract to build a specialized warehouse for 7 million....

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