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The following income statement is for X Company's two products, A and B: Product A Product B Revenue $87,000 $95,000 Total variable costs 52,200 55,100
The following income statement is for X Company's two products, A and B:
Product A | Product B | |||
Revenue | $87,000 | $95,000 | ||
Total variable costs | 52,200 | 55,100 | ||
Total contribution margin | $34,800 | $39,900 | ||
Total fixed costs | ||||
Avoidable | 28,292 | 18,243 | ||
Unavoidable | 23,148 | 12,677 | ||
Profit | $-16,640 | $8,980 |
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 $38,400, with $4,600 of additional fixed costs, what will be the effect on firm profits?
A: $4,291 | B: $5,020 | C: $5,873 | D: $6,872 | E: $8,040 | F: $9,407 |
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