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

Questions:

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

2. Assume that if X Company drops Product B, it can use the vacant space to increase sales of Product A by $36,700, but $3,000 of additional fixed costs will be incurred. This use of the vacant space will result in an increase in X Company's profits of

Product A $93,000 52,080 $40,920 Product B Revenue Total variable costs Total contribution margin Total fixed costs $95,000 57,000 $38,000 12,660 12,660 $15,600 29,871 26,489 $-18,360 Unavoidable Proinit