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The following Income Statement is for X Company and its only two products - A and B: Total Product A Product B Sales $175,940 $86,250
The following Income Statement is for X Company and its only two products - A and B:
Total | Product A | Product B | |
Sales | $175,940 | $86,250 | $89,690 |
Variable Costs | 99,526 | 45,712 | 53,814 |
Contribution margin | $76,414 | $40,538 | $35,876 |
Fixed costs: | |||
Avoidable | 62,330 | 39,120 | 23,210 |
Unavoidable | 37,180 | 29,360 | 7,820 |
Profit | $-23,096 | $-27,942 | $4,846 |
Because Product A is showing a loss, X Company is considering dropping it, and in its place, increase sales of Product B by $18,060.
If it drops Product A and increases sales of Product B, X Company's profits will increase by ... ?
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