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

next year:

Product A: P = .51 (R) - $57,420

Product B: P = .43 (R) - $23,830

where R is revenue. Budgeted revenue for the two products are $94,000 and $90,000,

respectively. Unavoidable fixed costs for the two products are $23,196 and $12,008,

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 $34,000, but that will require $2,300 of additional fixed costs.

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