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Company A provides you with the following information for its unique products X and Y. In total A has sold 8,000 units. X

Company A provides you with the following information for its unique products X and Y. In total A has sold 8,000 units.

 

 XY
Turnover

140 000$

400 000$

Costs of goods sold

108 000

258 000

Gross margin

32 000

142 000

Miscellaneous costs

36 000

79 500

Result

(4 000$)

62 500$

The fixed indirect manufacturing costs per unit included in the cost of goods sold of A and the company are $8 and $6, respectively. The unit variable miscellaneous costs are $5 for X and $21 for Y. The other miscellaneous costs are fixed. Y's units sold are 2,000.

A wishes to eliminate X. In such a situation the fixed manufacturing costs and the fixed miscellaneous costs remain unchanged. What will be the effect on A's net profit?

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