Question
The following information is for X Company's two products, A and B: Product A Product B Revenue $92,000 $88,000 Total contribution margin 38,640 36,960 Total
The following information is for X Company's two products, A and B:
| Product A | Product B | |||
| Revenue | $92,000 | $88,000 | ||
| Total contribution margin | 38,640 | 36,960 | ||
| Total fixed costs | 56,330 | 25,570 | ||
| Profit | $-17,690 | $11,390 | ||
$29,292 of Product A's fixed costs are avoidable; $15,342 of Product B's fixed costs are avoidable. X Company plans to drop Product A since it shows a loss and increase sales of Product B by $24,100. Accompanying the sales increase will be a fixed cost increase of $4,000. If X Company drops Product A and increases Product B sales, what will be the effect on firm profits?
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Internal Auditing Assurance And Consulting Services
Authors: Kurt Reding, Paul Sobel, Michael Head, Sridhar Ramamoorti, Urton Anderson
2nd Edition
0894136437, 978-0894136436
