MedScore, a medical supply company, entered into a three-year contract to provide Coney Hospital System with...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
MedScore, a medical supply company, entered into a three-year contract to provide Coney Hospital System with all of the Hospital System's needs for a medication named ExelGlom at a price of $1,200 per case. During the first year of the contract Coney Hospital System purchased 1,500 cases of the Exelglom from MedScore. At the beginning of the second year of the three-year contract MedScore notified Coney Hospital System that it was losing $120 per case on the sale of Exelglom during the first year of the contract, and therefore MedScore was not going to honor the last two years of the contract. Research by Coney Hospital Systems found that The best purchase price available to Coney Hospital System in year 2 of the contract is $1,600 per case, and the best price in year three of the contract is $1,640 per case. Expected demand for the medication for the second and third year years of the contract are 1,800 and 1,900 cases respectively. Coney Hospital system has decided to file suit against MedScore for damages they believe they will sustain during the last two years of the contract due to Medscore's breach of the contract. Required: You have been hired by Coney Hospital System as an Accounting expert in the case to determine the amount of damages incurred because MedScore refused to honor its commitment to supply the drug for the last two years of the contract at the contract price. Prepare your estimate of the damages that Coney Hospital suffered as the result of the breach of contract by MedScore. MedScore, a medical supply company, entered into a three-year contract to provide Coney Hospital System with all of the Hospital System's needs for a medication named ExelGlom at a price of $1,200 per case. During the first year of the contract Coney Hospital System purchased 1,500 cases of the Exelglom from MedScore. At the beginning of the second year of the three-year contract MedScore notified Coney Hospital System that it was losing $120 per case on the sale of Exelglom during the first year of the contract, and therefore MedScore was not going to honor the last two years of the contract. Research by Coney Hospital Systems found that The best purchase price available to Coney Hospital System in year 2 of the contract is $1,600 per case, and the best price in year three of the contract is $1,640 per case. Expected demand for the medication for the second and third year years of the contract are 1,800 and 1,900 cases respectively. Coney Hospital system has decided to file suit against MedScore for damages they believe they will sustain during the last two years of the contract due to Medscore's breach of the contract. Required: You have been hired by Coney Hospital System as an Accounting expert in the case to determine the amount of damages incurred because MedScore refused to honor its commitment to supply the drug for the last two years of the contract at the contract price. Prepare your estimate of the damages that Coney Hospital suffered as the result of the breach of contract by MedScore.
Expert Answer:
Answer rating: 100% (QA)
Answer To calculate the damages incurred by Coney Hospital System due to MedScores breach of contrac... View the full answer
Related Book For
Managerial Accounting
ISBN: 9780073526706
12th Edition
Authors: Ray H. Garrison, Eric W. Noreen, Peter C. Brewer
Posted Date:
Students also viewed these accounting questions
-
Anne wrote a Novel. She receives a payment of 5% of the $100 retail price for every book sold. This financial year she has sold 1,000 textbooks. What amount should Anne include in her assessable...
-
Read the case study "Southwest Airlines," found in Part 2 of your textbook. Review the "Guide to Case Analysis" found on pp. CA1 - CA11 of your textbook. (This guide follows the last case in the...
-
"I'm not sure we should lay out $300,000 for that automated welding machine," said Jim Alder, president of the Superior Equipment Company. "That's a lot of money, and it would cost us $84,000 for...
-
Describe how organizations should apply the general principles of the Uniform Guidelines on Employee Selection Procedures to practical selection decisions.
-
What is a cash advance? How are they commonly obtained? Discuss interest rates and grace periods with regard to cash advances.
-
Suppose that the inverse demand for San Francisco cable car rides is p = 10 - Q/1,000, where p is the price per ride and Q is the number of rides per day. Suppose the objective of San Francisco's...
-
The summary statements of financial position for Apple Ltd and Pear Ltd are set out below. Apple Ltd purchased 150,000 shares in Pear Ltd at a price of 1.60 per share on 30 September (the above...
-
Use Solver to create a Sensitivity Report for question 15 at the end of Chapter 3, and answer the following questions: a. Is the solution degenerate? b. Is the solution unique? c. Explain the signs...
-
Roberts Hardware is adding a new product line that will require an investment of $1.512.000. Managers estimate that this investment will have a 10-year life and generate net cash inflows of $330,000...
-
On January 1, 2009, Grates Inc. purchased equipment for $30,000. The company is depreciating the equipment at the rate of $400 per month. At January 31, 2010, the balance in Accumulated Depreciation...
-
Summarize the steps in the normative model of decision making and relate each to international business.
-
Time to attain the maximum value a. Peak time b. Rise time c. Maximum overshoot d. Settling time e. Decay time
-
How might organizations in different cultures go about trying to enhance leadership capabilities?
-
How might perception affect motivation in different cultures?
-
True or False. The response spectrum gives the maximum response of all possible single-degree-of-freedom systems.
-
Q8) The CEO of Equifax credit reporting agency claims the average credit rating has dropped below 675 points. A study of 20 randomly selected credit scores had an average of 660 points and a standard...
-
What are multinational corporations (MNCs) and what economic roles do they play?
-
Given your answers to Questions 8 and 9, how do you explain the existence of convertible bonds?
-
Show that if managers think their companys shares are overvalued, there is a better product to issue than a convertible bond.
-
Show that if managers think their companys shares are undervalued, there is a better product to issue than a convertible bond.
Study smarter with the SolutionInn App