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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$90,000Total variable costs 49,880 51,300 Total contribution margin$36,120$38,700Total
The following income statement is for X Company's two products, A and B:Product AProduct BRevenue$86,000$90,000Total variable costs49,88051,300Total contribution margin$36,120$38,700Total fixed costsAvoidable32,35816,192Unavoidable21,57214,358Profit$-17,810$8,150
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 $29,600, with $4,000 of additional fixed costs, what will be the effect on firm profits?
A: $3,178B: $3,973C: $4,966D: $6,208E: $7,759F: $9,699
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