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#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?
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