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The following income statement is for X Company's two products, A and B: Product A Product B Revenue $94,000 $89,000 Total variable costs 54,520 53,400
The following income statement is for X Company's two products, A and B:
Product A | Product B | |||
Revenue | $94,000 | $89,000 | ||
Total variable costs | 54,520 | 53,400 | ||
Total contribution margin | $39,480 | $35,600 | ||
Total fixed costs | ||||
Avoidable | 17,976 | 33,270 | ||
Unavoidable | 11,984 | 26,140 | ||
Profit | $9,520 | $-23,810 |
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 $31,900, with $3,800 of additional fixed costs, what will be the effect on firm profits?
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