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What should the year two price be

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Question - During Year 1, Thor Lab supplied hospitals with a comprehensive diagnostic kit for $120. At a volume of 80,000 kits, Thor had fixed costs of $1 million and a profit before income taxes of $200,000. Because of an adverse legal decision, Thor's Year 2 liability insurance increased by $1.2 million over Year 1. Assuming the volume and other costs are unchanged, what should the Year 2 price be if Thor is to make the same $200,000 profit before income taxes?

Reference no: EM133078362

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