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The following income statement is for X Company's two products, A and B: Product A Product B Revenue $90,000 $86,000 Total variable costs 52,200 50,740
The following income statement is for X Company's two products, A and B:
Product A | Product B | |||
Revenue | $90,000 | $86,000 | ||
Total variable costs | 52,200 | 50,740 | ||
Total contribution margin | $37,800 | $35,260 | ||
Total fixed costs | ||||
Avoidable | 18,079 | 29,808 | ||
Unavoidable | 13,091 | 25,392 | ||
Profit | $6,630 | $-19,940 |
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 $31,400, with $5,000 of additional fixed costs, what will be the effect on firm profits?
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