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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 $85,000 Total variable costs 51,520 46,750
The following income statement is for X Company's two products, A and B:
Product A | Product B | |||
Revenue | $92,000 | $85,000 | ||
Total variable costs | 51,520 | 46,750 | ||
Total contribution margin | $40,480 | $38,250 | ||
Total fixed costs | ||||
Avoidable | 15,254 | 32,915 | ||
Unavoidable | 11,046 | 23,835 | ||
Profit | $14,180 | $-18,500 |
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 $31,900, with $4,800 of additional fixed costs, what will be the effect on firm profits?
A: $2,690 | B: $3,901 | C: $5,656 | D: $8,202 | E: $11,893 | F: $17,244 |
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