Verdant Avionics makes aircraft instrumentation.Their basic navigation radio requires $140 in variable costs and requires $3,000 per month in fixed costs.If it processes the radio further to enhance its functionality,it will require an additional $30 per unit of variable costs and $300 per month in fixed costs.The marketing manager believes the sales price of the radio can be increased from $250 to $280.In making this decision,the amount of additional fixed costs per month is a relevant cost.

Question

Quizplus · Accepted Answer

The additional fixed costs per month of $300 is relevant to the decision of whether to enhance the functionality of the radio and increase the sales price, as it affects the overall profitability of the product.

Verdant Avionics Makes Aircraft Instrumentation