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The following infomation is for three of X Company's products: Product A Product B Product C Contribution margin rate 0.37 0.40 0.45 Fixed costs $39,194
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 | $39,194 | $31,752 | $33,732 |
Profit | $-3,563 | $13,608 | $8,433 |
Sales of Product A were $96,300, but X Company is still considering dropping it because of its reported loss. If it does, $19,597 of fixed costs can be avoided, and it can use use the freed-up resources to increase sales of Product B by $43,700. If X Company does drop Product A and increases sales of Product B, X Company's profits will change by
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