Question
The following information is for X Company's two products, A and B, last year: Product A Product B Sales $94,550 $94,280 Total variable costs 52,948
The following information is for X Company's two products, A and B, last year:
| Product A | Product B | ||
| Sales | $94,550 | $94,280 | |
| Total variable costs | 52,948 | 55,625 | |
| Total fixed costs | 78,290 | 31,590 | |
| Profit | $-36,688 | $7,065 | |
Because of the reported loss for Product A, X Company is considering dropping it. Further analysis reveals that $29,550 of Product A's fixed costs and $6,700 of Product B's fixed costs are common costs that the company allocates to the two products. 7. If X Company drops Product A, company profits will change by
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8. Assume that sales of Product B can be increased by $14,030 if Product A is dropped. What will be the effect of this increase on company profits?
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