Question
The following information is for X Company's two products - A and B: PRODUCT A: Revenue: $95,000 Variable costs: $51,300 Fixed costs: $58,410 Profit: $-14,710
The following information is for X Company's two products - A and B:
PRODUCT A:
Revenue: $95,000
Variable costs: $51,300
Fixed costs: $58,410
Profit: $-14,710
PRODUCT B:
Revenue: $90,000
Variable costs: $53,100
Fixed costs: $29,620
Profit: $7,280
$5,841 of Product A's fixed costs are directly related to Product A; $5,035 of Product B's fixed costs are directly related to Product B. All other fixed costs are allocated to the individual products.
X Company is considering droping Product A because of its reported loss
If it drops Product A, what will be the effect on firm profits?
A: -37,859
B: -47,324
c: -59,155
D: -73,943
E: -92,429
F: -115,536
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