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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 $95,000 Total variable costs 52,800 57,000
The following income statement is for X Company's two products, A and B:
Product A | Product B | |||
Revenue | $88,000 | $95,000 | ||
Total variable costs | 52,800 | 57,000 | ||
Total contribution margin | $35,200 | $38,000 | ||
Total fixed costs | ||||
Avoidable | 30,633 | 15,418 | ||
Unavoidable | 21,287 | 14,232 | ||
Profit | $-16,720 | $8,350 |
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 $32,900, with $4,200 of additional fixed costs, what will be the effect on firm profits?
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