Malmo Avionics makes aircraft instrumentation
Its basic navigation radio requires $70 in variable costs and $2,000 per month in fixed costs. Further processing the radio, to enhance its functionality, will require an additional $25 per unit of variable costs, plus an increase in fixed costs of $800 per month. The marketing manager believes that they would be able to increase the sales price of the radio from $260 to $300. Malmo sells 30 radios per month. If Malmo decides to further process the radio, monthly operating income would ________.
A) increase by $1,200
B) increase by $3,650
C) decrease by $350
D) decrease by $3,650
C .C)
Sell as is Process further
Sales revenue $7,800 $9,000
Less: Variable cost $2,100 2,100
Less: Variable cost for further processing 750
Less: Increase in fixed cost 800
Contribution margin $5,700 $5,350
Decrease in operating income $350
You might also like to view...
Every node in a network flow problem has a decision variable associated with it
Indicate whether the statement is true or false
The hero is always a loner, riding off into the sunset. Employers expect key employees to make critical decisions alone; rewards are given to individuals, not to teams. This describes a culture that is ________
A) low in institutional collectivism B) high in institutional collectivism C) high in assertiveness D) low in in-group collectivism