Airbolt Avionics makes aircraft instrumentation.Their basic navigation radio requires $120 in variable costs and requires $4,000 per month in fixed costs.If it processes the radio further to enhance its functionality,it will require an additional $20 per unit of variable costs and $200 per month in fixed costs.The marketing manager believes the sales price of the radio can be increased from $270 to $300.In making this decision,the amount of additional fixed costs per month is a relevant cost.

Question

Quizplus · Accepted Answer

The additional fixed cost of $200 per month is a relevant cost because it will affect the decision to process the radio further and increase the sales price.

Airbolt Avionics Makes Aircraft Instrumentation