Princeton Avionics Makes Aircraft Instrumentation

Multiple Choice

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 further processes the radio,to enhance its functionality,it will require an additional $40 per unit of variable costs,plus an increase 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 charged for the enhanced product is ________.

A) $320 per unit
B) $405 per unit
C) $125 per unit
D) $380 per unit