Question: Nordic Avionics makes aircraft instrumentation. Their basic navigation radio requires $80 in variable costs and requires $2,000 per month in fixed costs. Nordic sells 30

Nordic Avionics makes aircraft instrumentation. Their basic navigation radio requires $80 in variable costs and requires $2,000 per month in fixed costs. Nordic 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 CEO wishes to improve operating income by $1,000 per month by selling the enhanced version of the radio. In order to hit his target, the price to be charged for the enhanced product is: $440 per unit $345 per unit $367 per unit $212 per unit
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
