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The following income statement is for X Company's two products, A and B: Product A Product B Revenue $88,000 $91,000 Total variable costs 44,880 50,960
The following income statement is for X Company's two products, A and B:
Product A | Product B | |||
Revenue | $88,000 | $91,000 | ||
Total variable costs | 44,880 | 50,960 | ||
Total contribution margin | $43,120 | $40,040 | ||
Total fixed costs | ||||
Avoidable | 29,014 | 12,888 | ||
Unavoidable | 27,876 | 12,382 | ||
Profit | $-13,770 | $14,770 |
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 $31,900, with $4,400 of additional fixed costs, what will be the effect on firm profits?
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