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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 $88,000 Total variable costs 47,840 50,160
The following income statement is for X Company's two products, A and B:
Product A | Product B | |||
Revenue | $92,000 | $88,000 | ||
Total variable costs | 47,840 | 50,160 | ||
Total contribution margin | $44,160 | $37,840 | ||
Total fixed costs | ||||
Avoidable | 31,453 | 13,759 | ||
Unavoidable | 22,777 | 10,811 | ||
Profit | $-10,070 | $13,270 |
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 $37,400, with $3,800 of additional fixed costs, what will be the effect on firm profits?
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