Princeton Avionics Makes Aircraft Instrumentation

question 137

Multiple Choice

Princeton Avionics makes aircraft instrumentation.Its basic navigation radio requires $60 in variable costs and $4,000 per month in fixed costs.Princeton sells 20 radios per month.If the company further processes the radio,to enhance its functionality,it will require an additional $40 per unit of variable costs,plus an increase in fixed costs of $500 per month.The current sales price of the radio is $280.The CEO wishes to improve operating income by $1,200 per month by selling the enhanced version of the radio.In order to meet this target,the sales price to be charged for the enhanced product is ________.

• A) $320 per unit
• B) $405 per unit
• C) $125 per unit
• D) $380 per unit

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Definitions:

Private Securities Offerings

The sale of securities to a relatively small number of select investors as a way of raising capital, without the need to register with the Securities and Exchange Commission.

Underwriters

Professionals or entities that assess and undertake the risk of another party, often in insurance policies or issuance of securities.

Investment Banking Firms

Financial institutions that provide advisory services and capital raising strategies for corporations and governments.

Shelf Registrations

A regulatory provision that allows an issuer to register a new issue of securities without having to sell the entire issue at once.