Pegasus Avionics Makes Aircraft Instrumentation

question 195

Multiple Choice

Pegasus Avionics makes aircraft instrumentation.Its basic navigation radio requires $60 in variable costs and $3000 per month in fixed costs.Pegasus sells 10 radios per month.If the company further processes the radio,to enhance its functionality,it will require an additional $27 per unit of variable costs,plus an increase in fixed costs of $270 per month.The current sales price of the radio is $290.The marketing manager is sure that Pegasus can charge a higher sales price for the improved version.At what sales price level would the new,improved radio begin to improve operating earnings? (Round to the nearest whole dollar.)

• A) at a sales price higher than $344
• B) at a sales price of $290
• C) at a sales price lower than $290
• D) at a sales price of $377

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Definitions:

Elicited Set

A group of relevant brands or products that a consumer recalls and considers during the decision-making process.

Product Alternatives

Different products or services that serve the same purpose or fulfill the same need for a consumer, offering options in the marketplace.

Segmentation Variables

Criteria used to divide a market into clearly identifiable segments based on needs, behaviors, or demographics.

Purple Cows

A metaphor for products or services that are extraordinarily unique and stand out in a market, coined by marketing expert Seth Godin.