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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 $89,800 $92,500 Contribution margin 39,512
The following budgeted information is for X Company's two products, A and B, for 2022:
Product A | Product B | |
Sales | $89,800 | $92,500 |
Contribution margin | 39,512 | 41,625 |
Fixed costs | ||
Avoidable | 21,940 | 32,890 |
Unavoidable | 6,880 | 26,940 |
Profit | $10,692 | $-18,205 |
Because of the budgeted loss for Product B, X Company is considering dropping it in 2022. If Product B is dropped, the marketing department thinks that sales of Product A can be increased by $16,630.
If X Company drops Product B in 2022 and increases sales of Product A, company profits will change by
A: $-802 | B: $-1,066 | C: $-1,418 | D: $-1,886 | E: $-2,508 | F: $-3,336 |
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