MedScore, a medical supply company, entered into a three-year contract to provide Coney Hospital System with...
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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.
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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:
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