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The following income statement is for X Company's two products, A and B: Product A Product B Revenue $86,000 $95,000 Total variable costs 51,600 55,100
The following income statement is for X Company's two products, A and B:
Product A | Product B | |||
Revenue | $86,000 | $95,000 | ||
Total variable costs | 51,600 | 55,100 | ||
Total contribution margin | $34,400 | $39,900 | ||
Total fixed costs | ||||
Avoidable | 13,182 | 30,206 | ||
Unavoidable | 12,168 | 21,874 | ||
Profit | $9,050 | $-12,180 |
If X Company drops Product B because it shows a loss and is able to use the vacant space to increase sales of Product A by $31,500, with $4,000 of additional fixed costs, what will be the effect on firm profits?
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