Question
The following are the budgeted profit functions for X Company's two products, A and B, next year: Product A: P = .43 (R) - $58,330
The following are the budgeted profit functions for X Company's two products, A and B, next year:
Product A: P = .43 (R) - $58,330
Product B: P = .44 (R) - $31,650
where R is revenue. Budgeted revenue for the two products are $92,000 and $95,000, respectively. Unavoidable fixed costs for the two products are $23,332 and $13,926, respectively. The company is considering dropping Product A; if it does, the resulting freed-up resources can be used to increase revenue from sales of Product B by $15,200, with no additional fixed costs. If X Company drops A and increases revenue from B, firm profits will change by
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