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Product A Product B Product C Contribution margin rate 0.35 0.39 0.43 Fixed costs $24,524 $48,005 $30,685 Profit $10,510 $-4,364 $7,671 Sales of Product B
Product A | Product B | Product C | |
Contribution margin rate | 0.35 | 0.39 | 0.43 |
Fixed costs | $24,524 | $48,005 | $30,685 |
Profit | $10,510 | $-4,364 | $7,671 |
Sales of Product B were $111,900, but X Company is still considering dropping it because of its reported loss. If it does, $24,003 of fixed costs can be avoided, and it can use use the freed-up resources to increase sales of Product C by $43,700. If X Company does drop Product B and increases sales of Product C, X Company's profits will change by
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