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The following income statement is for X Company's two products, A and B: Product A Product B Revenue $86,000 $89,000 Total variable costs 48,160 51,620
The following income statement is for X Company's two products, A and B:
Product A | Product B | |||
Revenue | $86,000 | $89,000 | ||
Total variable costs | 48,160 | 51,620 | ||
Total contribution margin | $37,840 | $37,380 | ||
Total fixed costs | ||||
Avoidable | 13,992 | 25,635 | ||
Unavoidable | 12,408 | 25,635 | ||
Profit | $11,440 | $-13,890 |
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 $4,000 of additional fixed costs, what will be the effect on firm profits
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