Nordic Avionics makes aircraft instrumentation.Its basic navigation radio requires $80 in variable costs and requires $2,000 per month in fixed costs.If they upgrade the radio further to enhance its functionality,it will require an additional $25 per unit of variable costs,but no change to the fixed costs.The marketing manager believes that the company would be able to boost the price of the radio from $260 to $280.If it does so,how would the change affect operating income?
A) It would remain the same.
B) It would go up by $25 per unit.
C) It would go up by $20 per unit.
D) It would go down by $5 per unit.
Correct Answer:
Verified
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