QUESTION 4

1. Nordic Avionics makes aircraft instrumentation. Its basic navigation radio requires $80 in variable costs and requires $2,000 per month in fixed costs. If they upgrade the radio further to enhance its functionality, it will require an additional $25 per unit of variable costs, but no change to the fixed costs. The marketing manager believes that the company would be able to boost the price of the radio from $260 to $280. If it does so, how would the change affect operating income?

		It would remain the same.
		It would go up by $25 per unit.
		It would go up by $20 per unit.
		It would go down by $5 per unit.