Question
Product A:P = .42 (R) - $26,440 Product B:P = .50 (R) - $58,190 Where R is revenue. Budgeted revenue for the two products are
Product A:P = .42 (R) - $26,440
Product B:P = .50 (R) - $58,190
Where R is revenue. Budgeted revenue for the two products are $86,000 and $95,000, respectively. Avoidable fixed costs for the two products are $16,393 and $32,004, respectively.
The company is considering dropping Product B because it appears to be losing money. If it does, the resulting freed-up resources can be used to increase revenue from sales of Product A by $36,000, but that will require $2,800 of additional fixed costs.
If X Company drops B and increases revenue from A, firm profits will change by ?
I need help on this budgeted profit function for two products.
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