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The following income statement is for X Company's two products, A and B: Product A Product B Revenue $94,000 $90,000 Total variable costs 49,820 54,000
The following income statement is for X Company's two products, A and B:
Product A | Product B | |||
Revenue | $94,000 | $90,000 | ||
Total variable costs | 49,820 | 54,000 | ||
Total contribution margin | $44,180 | $36,000 | ||
Total fixed costs | ||||
Avoidable | 34,680 | 14,862 | ||
Unavoidable | 24,100 | 10,328 | ||
Profit | $-14,600 | $10,810 |
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 $35,000, with $4,000 of additional fixed costs, what will be the effect on firm profits?
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