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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 = .54 (R) -

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

Product A: P = .54 (R) - $58,040

Product B: P = .44 (R) - $32,130

where R is revenue. Budgeted revenue for the two products are $85,000 and $90,000, respectively. Unavoidable fixed costs for the two products are $22,055 and $12,852, 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 $35,900, but that will require $2,600 of additional fixed costs.

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

A 1,680

B 2,100

C 2,625

D 3,281

E 4,101

F 5,126

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