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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 $91,000 Total variable costs 57,000 50,960
The following income statement is for X Company's two products, A and B:
Product A | Product B | |||
Revenue | $95,000 | $91,000 | ||
Total variable costs | 57,000 | 50,960 | ||
Total contribution margin | $38,000 | $40,040 | ||
Total fixed costs | ||||
Avoidable | 13,673 | 25,060 | ||
Unavoidable | 11,647 | 25,060 | ||
Profit | $12,680 | $-10,080 |
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 $36,700, with $4,800 of additional fixed costs, what will be the effect on firm profits?
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