During 2006,Thor Lab Supplied Hospitals with a Comprehensive Diagnostic Kit

Multiple Choice

During 2006,Thor Lab supplied hospitals with a comprehensive diagnostic kit for $120.At a volume of 80,000 kits,Thor had fixed costs of $1,000,000 and a profit before income taxes of $200,000.Due to an adverse legal decision,Thor's 2007 liability insurance increased by $1,200,000 over 2006.Assuming the volume and other costs are unchanged,what should the 2007 price be if Thor is to make the same $200,000 profit before income taxes? (CPA adapted)

A) $122.50
B) $135.00
C) $152.50
D) $240.00