Nordic Avionics Makes Aircraft Instrumentation

question 36

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, plus an increase in fixed costs of $800 per month. The marketing manager believes that they would be able to boost their price of the radio from $260 to $300. Nordic sells 30 radios per month. If they decide to process further, what would the impact be on monthly operating income?

• A)It would increase by $1,050.
• B)It would increase by $250.
• C)It would decrease by $350.
• D)It would decrease by $750.