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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 = .52 (R) -

The following are the budgeted profit functions for X Company's two products, A and B, for next year:

Product A: P = .52 (R) - $55,520

Product B: P = .41 (R) - $26,510

where R is revenue. Budgeted revenue for the two products are $95,000 and $87,000, respectively. Unavoidable fixed costs for the two products are $19,987 and $10,604, respectively.

The company is considering dropping Product A 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 B by $36,800, but that will require $2,400 of additional fixed costs.

If X Company drops A and increases revenue from B, firm profits will change by

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