In a Case Filed in the Federal Court, Gamma Inc

question 71

Essay

In a case filed in the federal court, Gamma Inc sued Delta Ltd for breach of contract.Gamma claimed damages of $500 000.Although Delta denied liability, it formally offered to settle the claim for $200 000.Gamma rejected that offer, but in response, it formally offered to settle its claim for $400 000.Delta rejected that offer.The case has now gone to trial.Explain what order the judge will likely make with respect to costs if (a) Delta is held liable for $450 000, (b) Delta is held liable for $100 000, or (c) Delta is held not liable.

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Definitions:

Sales Dollars

The total revenue generated from the sale of goods or services before any expenses are deducted.

Break-Even Point

The production level or sales volume at which total revenues equal total expenses, resulting in no net loss or gain.

Contribution Margin

The difference between sales revenue and variable costs, which contributes towards covering fixed costs and earning profit.

Fixed Costs

Costs that do not vary with the volume of production or sales, such as rent, salaries, and insurance premiums.