Nordic Avionics Makes Aircraft Instrumentation

question 2

Multiple Choice

Nordic Avionics makes aircraft instrumentation.Their basic navigation radio requires $80 in variable costs and $2000 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 profit?

• A) It would decrease by $3950.
• B) It would increase by $3950.
• C) It would increase by $1200.
• D) It would decrease by $350.

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