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The following income statement is for X Company's two products, A and B: Product A Product B Revenue $92,000 $92,000 Total variable costs 49,680 51,520
The following income statement is for X Company's two products, A and B:
Product A | Product B | |||
Revenue | $92,000 | $92,000 | ||
Total variable costs | 49,680 | 51,520 | ||
Total contribution margin | $42,320 | $40,480 | ||
Total fixed costs | ||||
Avoidable | 32,515 | 17,795 | ||
Unavoidable | 23,545 | 13,425 | ||
Profit | $-13,740 | $9,260 |
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 $26,400, with $3,400 of additional fixed costs, what will be the effect on firm profits?
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