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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 $87,000 Total variable costs 51,040 51,330
The following income statement is for X Company's two products, A and B:
Product A | Product B | |||
Revenue | $88,000 | $87,000 | ||
Total variable costs | 51,040 | 51,330 | ||
Total contribution margin | $36,960 | $35,670 | ||
Total fixed costs | ||||
Avoidable | 16,266 | 28,463 | ||
Unavoidable | 14,424 | 24,247 | ||
Profit | $6,270 | $-17,040 |
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 $32,400, with $3,400 of additional fixed costs, what will be the effect on firm profits?
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