Airbolt Avionics makes aircraft instrumentation.Their basic navigation radio requires $140 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 $300 per month in fixed costs.The marketing manager believes the sales price of the radio can be increased from $250 to $290.In making this decision,the amount of additional fixed costs per month is a relevant cost.

Question

Quizplus · Accepted Answer

The additional fixed costs of $300 per month required to enhance the functionality of the navigation radio are a relevant cost, as they will affect the company's overall profit from selling the upgraded radio with a higher price point.

Airbolt Avionics Makes Aircraft Instrumentation