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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 $93,000 Total variable costs 52,200 53,010
The following income statement is for X Company's two products, A and B:
Product A | Product B | |||
Revenue | $90,000 | $93,000 | ||
Total variable costs | 52,200 | 53,010 | ||
Total contribution margin | $37,800 | $39,990 | ||
Total fixed costs | ||||
Avoidable | 31,170 | 18,195 | ||
Unavoidable | 21,660 | 13,175 | ||
Profit | $-15,030 | $8,620 |
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 $27,000, with $3,800 of additional fixed costs, what will be the effect on firm profits?
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