Nordic Avionics Makes Aircraft Instrumentation

question 94

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. Nordic sells 30 radios per month. 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 current price of the radio is $260. The marketing manager is sure that they can charge a higher price for the improved version. At what price level would the new, improved radio begin to improve operational earnings? Round to nearest whole dollar.

• A)at a price of higher than $312
• B)at a price of $309 or higher
• C)at a price of lower than $420
• D)at a price of $295 or higher

---

Definitions:

Employer-provided

typically refers to benefits or services, such as health insurance, that are offered to employees as part of their employment package.

Private Health Insurance

Health insurance provided by private entities as opposed to government programs, offering coverage for medical expenses to insured individuals.

Economies Of Scale

The cost benefits that corporations acquire from their large operational scale, where the unit cost tends to decrease as the scale of operation grows.

Health Care Costs

The total expenditures for services and products related to the prevention, treatment, and management of illness or the preservation of mental and physical well-being through the services offered by the medical and allied health professions.