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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 52,440 44,200
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 | 52,440 | 44,200 | ||
Total contribution margin | $39,560 | $40,800 | ||
Total fixed costs | ||||
Avoidable | 15,855 | 29,193 | ||
Unavoidable | 15,855 | 26,947 | ||
Profit | $7,850 | $-15,340 |
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 $38,600, with $4,200 of additional fixed costs, what will be the effect on firm profits?
A: $791 | B: $1,147 | C: $1,663 | D: $2,411 | E: $3,496 | F: $5,069 |
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