Nordic Avionics Makes Aircraft Instrumentation

question 140

Multiple Choice

Nordic Avionics makes aircraft instrumentation. Their basic navigation radio requires $80 in variable costs and requires $2,000 per month in fixed costs. If they process the radio further to enhance its functionality, it will require an additional $25 per unit of variable costs, but no change to the fixed costs. The marketing manager believes that they would be able to boost their price of the radio from $260 to $280. If they do so, how would the change affect operating income?

• A)It would remain the same.
• B)It would go up by $25 per unit.
• C)It would go up by $20 per unit.
• D)It would go down by $5 per unit.

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Definitions:

Return on Investment

A performance measure used to evaluate the efficiency or profitability of an investment relative to its cost.

Expectations

The beliefs or forecasts about future events affecting economic decisions and behaviors.

Voice Activated Software

Software that is able to interpret and execute commands given through spoken words.

Expected Return

The anticipated profit or loss from an investment, considering all possible outcomes and their probabilities.