Question
The following are the budgeted cost functions for X Company's two products, A and B, next year: Product A: P = .49 (R) - $57,630
The following are the budgeted cost functions for X Company's two products, A and B, next year:
Product A: P = .49 (R) - $57,630
Product B: P = .44 (R) - $29,200
Budgeted revenue for the two products are $90,000 and $89,000, respectively. Avoidable fixed costs for the two products are $36,883 and $17,228, respectively. The company is considering dropping Product A because it shows a $13,530 loss for next year. If X Company drops A, it will use the freed-up resources to increase sales of Product B by $18,700, but there will be additional fixed costs of $2,000. If X Company drops A and increases sales of B, firm profits will change by
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