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The following income statement is for X Company's two products, A and B: Product A Product B Revenue $87,000 $95000 Total variable costs 49590 48,450
The following income statement is for X Company's two products, A and B:
Product A | Product B | |||
Revenue | $87,000 | $95000 | ||
Total variable costs | 49590 | 48,450 | ||
Total contribution margin | $37,410 | $46,550 | ||
Total fixed costs | ||||
Avoidable | 13,531 | 33,138 | ||
Unavoidable | 11,999 | 22,092 | ||
Profit | $11,880 | $-8,680 |
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 $26,200, with $5,000 of additional fixed costs, what will be the effect on firm profits?
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