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The following income statement is for X Company's two products, A and B: Product A Product B Revenue $95,000 $95,000 Total variable costs 52,250 56,050
The following income statement is for X Company's two products, A and B:
Product A | Product B | |||
Revenue | $95,000 | $95,000 | ||
Total variable costs | 52,250 | 56,050 | ||
Total contribution margin | $42,750 | $38,950 | ||
Total fixed costs | ||||
Avoidable | 27,173 | 17,252 | ||
Unavoidable | 26,107 | 11,988 | ||
Profit | $-10,530 | $9,710 |
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 $37,100, with $3,200 of additional fixed costs, what will be the effect on firm profits?
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