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The following income statement is for X Company's two products, A and B: Product A Product B Revenue $95,000 $86,000 Total variable costs 56,050 43,860
The following income statement is for X Company's two products, A and B:
Product A | Product B | |||
Revenue | $95,000 | $86,000 | ||
Total variable costs | 56,050 | 43,860 | ||
Total contribution margin | $38,950 | $42,140 | ||
Total fixed costs | ||||
Avoidable | 17,926 | 30,173 | ||
Unavoidable | 14,084 | 23,707 | ||
Profit | $6,940 | $-11,740 |
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 $33,700, with $3,400 of additional fixed costs, what will be the effect on firm profits?
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