Answered step by step
Verified Expert Solution
Question
1 Approved Answer
The following information is for X Company's two products - A and B: Product A Product B Total contribution margin $37,840 $38,640 Contribution margin rate
The following information is for X Company's two products - A and B:
Product A | Product B | |
Total contribution margin | $37,840 | $38,640 |
Contribution margin rate | 43% | 42% |
Fixed costs | $57,570 | $25,570 |
Profit | $-19,730 | $13,070 |
10% of Product A's fixed costs are allocated; 18% 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 A because of the $19,730 loss. If X Company drops A, it will use the freed-up resources to increase sales of Product B by $14,200, but there will be additional fixed costs of $2,800. If X Company drops A, firm profits will change by
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