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The following are the budgeted profit functions for X Company's two products, A and B, for next year: Product A: P = .42 (R) -
The following are the budgeted profit functions for X Company's two products, A and B, for next year: Product A: P = .42 (R) - $28,400 Product B: P = .55 (R) - $57,640 where R is revenue. Budgeted revenue for the two products are $95,000 and $91,000, respectively. Avoidable fixed costs for the two products are $17,892 and $34,584, 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 $36,500, but that will require $2,200 of additional fixed costs. If X Company drops B and increases revenue from A, firm profits will change by A: $-1,706 | OB: $-1,997 Oc: $-2,336 D: $-2,733| OE: $-3,198|OF: $-3,741
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