Nordic Avionics Makes Aircraft Instrumentation

question 120

Multiple Choice

Nordic Avionics makes aircraft instrumentation.Its basic navigation radio requires $80 in variable costs and requires $2,000 per month in fixed costs.Nordin sells 30 radios per month.If the company upgrades 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 CEO wishes to improve operating income by $1,000 per month by selling the enhanced version of the radio.In order to meet this target,the price to be charged for the enhanced product is ________.

• A)$212 per unit
• B)$345 per unit
• C)$440 per unit
• D)$367 per unit

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Definitions:

Revenue Accounts

Accounts that track the income a business receives from its various activities, such as sales of products or services.

Loss Accounts

Accounts used to record the loss in value of assets or to represent expenses that reduce net income.

Revenue Recognition

The accounting principle that determines the specific conditions under which revenue is recognized or accounted for.

Inventory Purchased

Goods bought by a company for the purpose of resale in the ordinary course of business.