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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 $88,000 Total variable costs 49,020 45,760
The following income statement is for X Company's two products, A and B:
Product A | Product B | |||
Revenue | $86,000 | $88,000 | ||
Total variable costs | 49,020 | 45,760 | ||
Total contribution margin | $36,980 | $42,240 | ||
Total fixed costs | ||||
Avoidable | 17,561 | 25,415 | ||
Unavoidable | 14,959 | 25,415 | ||
Profit | $4,460 | $-8,590 |
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 $24,300, with $5,000 of additional fixed costs, what will be the effect on firm profits?
A: $-6,431 | B: $-8,553 | C: $-11,376 | D: $-15,130 | E: $-20,123 | F: $-26,764 |
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