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The following income statement is for X Company's two products, A and B: Product A Product B Revenue $88,000 $94,000 Total variable costs 51,920 53,580
The following income statement is for X Company's two products, A and B:
Product A Product B Revenue $88,000 $94,000 Total variable costs 51,920 53,580 Total contribution margin $36,080 $40,420 Total fixed costs Avoidable 14,137 27,760 Unavoidable 13,583 27,760 Profit $8,360 $-15,100
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 $30,700, with $5,000 of additional fixed costs, what will be the effect on firm profits?
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