Question
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) - $58,840 Product B: P = .41 (R) - $32,500 where R is revenue. Budgeted revenue for the two products are $90,000 and $94,000, respectively. Unavoidable fixed costs for the two products are $21,771 and $13,650, 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 $3,000 of additional fixed costs. If X Company drops A and increases revenue from B, firm profits will change by
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