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The following income statement is for X Company's two products, A and B: Product A Product B Revenue $93,000 $91,000 Total variable costs 53,940 50,050
The following income statement is for X Company's two products, A and B:
Product A | Product B | |||
Revenue | $93,000 | $91,000 | ||
Total variable costs | 53,940 | 50,050 | ||
Total contribution margin | $39,060 | $40,950 | ||
Total fixed costs | ||||
Avoidable | 17,429 | 29,104 | ||
Unavoidable | 12,621 | 21,076 | ||
Profit | $9,010 | $-9,230 |
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 $38,700, with $3,800 of additional fixed costs, what will be the effect on firm profits?
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