Verdant Avionics makes aircraft instrumentation.Their basic navigation radio requires $130 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 $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 per month of $300 to enhance the functionality of the radio is a relevant cost as it will impact the company's profits and decision to increase the sales price.

Verdant Avionics Makes Aircraft Instrumentation