Answered step by step
Verified Expert Solution
Question
1 Approved Answer
The following infomation is for three of X Company's products: Product A Product B Product C Contribution margin rate 0.37 0.40 0.45 Fixed costs $26,030
The following infomation is for three of X Company's products:
Product A | Product B | Product C | |
Contribution margin rate | 0.37 | 0.40 | 0.45 |
Fixed costs | $26,030 | $37,312 | $37,323 |
Profit | $11,156 | $9,328 | $-3,393 |
Sales of Product C were $75,400, but X Company is still considering dropping it because of its reported loss. If it does, $18,662 of fixed costs can be avoided, and it can use use the freed-up resources to increase sales of Product B by $44,800. If X Company does drop Product C and increases sales of Product B, X Company's profits will change by
A: $870 | B: $1,261 | C: $1,829 | D: $2,652 | E: $3,845 | F: $5,575 |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started