The following information is for X Company's two products, A and B:

Product A Product B

Revenue $93,000 $95,000

Total variable costs 55,800 57,000

Total contribution margin $37,200 $38,000

Total fixed costs

Avoidable 14,550 28,269

Unavoidable 14,550 24,081

Profit $8,100 $-14,350

7. If X Company drops Product B because it shows a loss, what will be the effect on firm profits?

8. Assume that if X Company drops Product B, it can use the vacant space to increase sales of Product A by $36,100, but $4,600 of additional fixed costs will be incurred. This use of the vacant space will result in an increase in X Company's profits of