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The following information is for X Company's two products, A and B: Product A Product B Revenue $93,000 $90,000 Total contribution margin $39,990 $37,800 Total
The following information is for X Company's two products, A and B:
Product A | Product B | |||
Revenue | $93,000 | $90,000 | ||
Total contribution margin | $39,990 | $37,800 | ||
Total fixed costs | $24,920 | $57,550 | ||
Profit | $15,070 | $-19,750 |
$4,486 of Product A's fixed costs are avoidable; $9,784 of Product B's fixed costs are avoidable. X Company is considering dropping Product B. If it does, it can use the freed-up resources to increase sales of Product A by $34,500, but $2,400 of additional fixed costs will be incurred. If X Company drops Product B and increases Product A sales, firm profits will fall by
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