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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 $85,000 Total variable costs 54,520 49,300
The following income statement is for X Company's two products, A and B:
Product A | Product B | |||
Revenue | $94,000 | $85,000 | ||
Total variable costs | 54,520 | 49,300 | ||
Total contribution margin | $39,480 | $35,700 | ||
Total fixed costs | ||||
Avoidable | 28,280 | 13,904 | ||
Unavoidable | 27,170 | 11,376 | ||
Profit | $-15,970 | $10,420 |
If X Company drops Product A because it shows a loss and is able to use the vacant space to increase sales of Product B by $29,700, with $3,600 of additional fixed costs, what will be the effect on firm profits?
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