Pegasus Avionics Makes Aircraft Instrumentation

question 105

Multiple Choice

Pegasus Avionics makes aircraft instrumentation.Its basic navigation radio requires $80 in variable costs and $5000 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 $29 per unit of variable costs,plus an increase in fixed costs of $290 per month.The current sales price of the radio is $310.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 $368
• B)at a sales price of $310
• C)at a sales price lower than $310
• D)at a sales price of $419

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