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 Revenue $85,000 $93,000 Variable Costs 49,300 54,870 Fixed
The following information is for X Company's two products - A and B:
Product A | Product B | |
Revenue | $85,000 | $93,000 |
Variable Costs | 49,300 | 54,870 |
Fixed costs | $52,590 | $26,690 |
Profit | $-16,890 | $11,440 |
$7,363 of Product A's fixed costs are directly related to Product A; $4,537 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: $-25,077 | B: $-28,337 | C: $-32,021 | D: $-36,184 | E: $-40,888 | F: $-46,203 |
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