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The following income statement is for X Company's two products, A and B: Product A Product B Revenue $92,000 $92,000 Total variable costs 54,280 47,840
The following income statement is for X Company's two products, A and B:
Product A | Product B | |||
Revenue | $92,000 | $92,000 | ||
Total variable costs | 54,280 | 47,840 | ||
Total contribution margin | $37,720 | $44,160 | ||
Total fixed costs | ||||
Avoidable | 14,260 | 30,612 | ||
Unavoidable | 13,700 | 20,408 | ||
Profit | $9,760 | $-6,860 |
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 $31,500, with $4,200 of additional fixed costs, what will be the effect on firm profits?
A: $-1,980 | B: $-2,474 | C: $-3,093 | D: $-3,866 | E: $-4,833 | F: $-6,04 |
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