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 future processes the radio, to enhance its functionality, it will require and additional $40 per unit of variable costs, plus an increases 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 changed for the enhanced product is --------

Select one:

a. $320 per unit

b. $380 per unit

c. $125 per unit

d. $405 per unit

Answer rating: 100% (QA)

incremental variable cost 800 Add increase ... View the full answer