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The following income statement is for X Company's two products, A and B: Product A Product B Revenue $93,000 $91,000 Total variable costs 55,800 53,690
The following income statement is for X Company's two products, A and B:
Product A | Product B | |||
Revenue | $93,000 | $91,000 | ||
Total variable costs | 55,800 | 53,690 | ||
Total contribution margin | $37,200 | $37,310 | ||
Total fixed costs | ||||
Avoidable | 16,770 | 29,172 | ||
Unavoidable | 11,180 | 26,928 | ||
Profit | $9,250 | $-18,790 |
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 $26,700, with $4,600 of additional fixed costs, what will be the effect on firm profits?
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