Question
The following are the budgeted cost functions for X Company's two products, A and B, next year: Product A: P = .43 (R) - $27,240
The following are the budgeted cost functions for X Company's two products, A and B, next year:
Product A: P = .43 (R) - $27,240
Product B: P = .49 (R) - $57,790
Budgeted revenue for the two products are $93,000 and $87,000, respectively. Avoidable fixed costs for the two products are $16,889 and $33,518, respectively. The company is considering dropping Product B because it shows a $15,160 loss for next year. If X Company drops B, it will use the freed-up resources to increase sales of Product A by $17,000, but there will be additional fixed costs of $2,000. If X Company drops B and increases sales of A, firm profits will change by???
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