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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 |
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