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The following information is for X Company's two products - A and B: Product A Product B Total contribution margin $38,720 $42,240 Contribution margin rate
The following information is for X Company's two products - A and B:
Product A | Product B | |
Total contribution margin | $38,720 | $42,240 |
Contribution margin rate | 44% | 48% |
Fixed costs | $32,860 | $53,260 |
Profit | $5,860 | $-11,020 |
10% of Product A's fixed costs are allocated; 15% of Product B's fixed costs are allocated. The unallocated fixed costs are directly related to the individual products. The company is considering dropping Product B because of the $11,020 loss. If X Company drops B, it will use the freed-up resources to increase sales of Product A by $15,400, but there will be additional fixed costs of $2,400. If X Company drops B, firm profits will change by
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