Question
The following information is for X Company's two products - A and B: Product A Product B Revenue $87,000 $89,000 Variable Costs 44,370 52,510 Fixed
The following information is for X Company's two products - A and B:
| Product A | Product B | |
| Revenue | $87,000 | $89,000 |
| Variable Costs | 44,370 | 52,510 |
| Fixed costs | $51,380 | $30,090 |
| Profit | $-8,750 | $6,400 |
$7,193 of Product A's fixed costs are directly related to Product A; $5,416 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?
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Comparative International Accounting
Authors: Christopher Nobes, R. H. Parker
6th Edition
0273646028, 978-0273646020
