Nordic Avionics Makes Aircraft Instrumentation

Multiple Choice

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 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