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The following information is for X Company's two products, A and B, last year: Product A Product B Sales $85,180 $88,380 Total variable costs 51,108

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

Product A Product B
Sales $85,180 $88,380
Total variable costs 51,108 47,725
Total fixed costs 28,860 75,300
Profit $5,212 $-34,645

Because of the reported loss for Product B, X Company is considering dropping it. Further analysis reveals that $6,450 of Product A's fixed costs and $26,740 of Product B's fixed costs are common costs that the company allocates to the two products.

7. If X Company drops Product B, company profits will change by ________?

8. Assume that sales of Product A can be increased by $18,240 if Product B is dropped. What will be the effect of this increase on company profits?

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