Answered step by step
Verified Expert Solution
Question
1 Approved Answer
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 53,360 47,170
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 | 53,360 | 47,170 | ||
Total contribution margin | $38,640 | $41,830 | ||
Total fixed costs | ||||
Avoidable | 16,611 | 29,519 | ||
Unavoidable | 12,029 | 24,151 | ||
Profit | $10,000 | $-11,840 |
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 $31,200, with $4,400 of additional fixed costs, what will be the effect on firm profits?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started