Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

#6. The following income statement is for X Company's two products, A and B: Product A Product B Revenue $94,000 $88,000 Total variable costs 49,820

#6. The following income statement is for X Company's two products, A and B:

Product A Product B
Revenue $94,000 $88,000
Total variable costs 49,820 49,280
Total contribution margin $44,180 $38,720
Total fixed costs
Avoidable 28,595 13,010
Unavoidable 26,395 12,500
Profit $-10,810 $13,210

If X Company drops Product A because it shows a loss and is able to use the vacant space to increase sales of Product B by $29,500, with $4,800 of additional fixed costs, what will be the effect on firm profits?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Students also viewed these Accounting questions

Question

What is meant by planning or define planning?

Answered: 1 week ago

Question

Define span of management or define span of control ?

Answered: 1 week ago

Question

What is meant by formal organisation ?

Answered: 1 week ago

Question

What is meant by staff authority ?

Answered: 1 week ago