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The following infomation is for three of X Company's products: Product A Product B Product C Contribution margin rate 0.36 0.39 0.44 Fixed costs $24,066
The following infomation is for three of X Company's products:
Product A | Product B | Product C | |
Contribution margin rate | 0.36 | 0.39 | 0.44 |
Fixed costs | $24,066 | $32,214 | $39,059 |
Profit | $10,314 | $13,806 | $-3,551 |
Sales of Product C were $80,700, but X Company is still considering dropping it because of its reported loss. If it does, $19,529 of the fixed costs associated with it can be avoided, and sales of Product A can be increased by $43,100.
If X Company does drop Product C and increases sales of Product A, X Company's profits will change by
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