Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The following budgeted information is for X Company's two products, A and B, for 2022: Product A Product B Sales $91,700 $87,300 Contribution margin 37,597

The following budgeted information is for X Company's two products, A and B, for 2022:

Product A Product B
Sales $91,700 $87,300
Contribution margin 37,597 38,412
Fixed costs
Avoidable 27,230 24,690
Unavoidable 27,230 5,840
Profit $-16,863 $7,882

Because of the budgeted loss for Product A, X Company is considering dropping it in 2022. If Product A is dropped, the marketing department thinks that sales of Product B can be increased by $14,810.

If X Company drops Product A in 2022 and increases sales of Product B, company profits will change by

A: $-1,756 B: $-2,055 C: $-2,404 D: $-2,813 E: $-3,291 F: $-3,851

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Students also viewed these Accounting questions