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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 $89,000 Total variable costs 54,280 49,840
The following income statement is for X Company's two products, A and B:
Product A | Product B | |||
Revenue | $92,000 | $89,000 | ||
Total variable costs | 54,280 | 49,840 | ||
Total contribution margin | $37,720 | $39,160 | ||
Total fixed costs | ||||
Avoidable | 16,054 | 32,082 | ||
Unavoidable | 13,676 | 25,208 | ||
Profit | $7,990 | $-18,130 |
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 $28,200, with $4,000 of additional fixed costs, what will be the effect on firm profits?
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