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The following information is for X Company's two products, A and B, last year: Product A Product B Sales $ 93,960 $ 89,110 Total variable
The following information is for X Company's two products, A and B, last year:
Product A | Product B | |
Sales | $ 93,960 | $ 89,110 |
Total variable cost | 55,436 | 48,119 |
Total fixed costs | 32,000 | 69,760 |
Profit | $ 6,524 | $-28769 |
Because of the reported loss for Product B, X Company is considering dropping it. Further analysis reveals that $7,880 of Product A's fixed costs and $28,440 of Product B's fixed costs are common costs that the company allocates to the two products.
1. If X Company drops Product B, company profits will change by______?
2. Assume that sales of Product A can be increased by $15,410 if Product B is dropped. What will be the effect of this increase on company profits?
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