Nordin Avionics makes aircraft instrumentation. Their basic navigation radio requires $80 in variable costs and requires $2,000 per month in fixed costs. If they process the radio further to enhance its functionality, it will require an additional $25 per unit of variable costs, plus an increase in fixed costs of $800 per month. The marketing manager believes they would be able to boost their price of the radio from $260 to $300. Nordin sells 30 radios per month. If they decide to process further, what would the impact be on monthly operational income?

Question

Quizplus · Accepted Answer

C) Calculations:
($300 - $260) × 30 = $1,200
($25 × 30) + $800 = $1,550
$1,200 - $1,550 = ($350)

Nordin Avionics Makes Aircraft Instrumentation