ABC Company makes aircraft instrumentation. Their basic navigation radio requires $80 in variable costs and requires $2,000

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Question:

ABC Company makes aircraft instrumentation. Their basic navigation radio requires $80 in variable costs and requires $2,000 per month in fixed costs. Company 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