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The following income statement is for X Company's two products, A and B: Product A   Product...

The following income statement is for X Company's two products, A and B:

Product A   Product B  
Revenue $91,000    $85,000   
Total variable costs   54,600      46,750   
Total contribution margin $36,400    $38,250   
Total fixed costs
   Avoidable 13,500    32,822   
   Unavoidable   13,500      22,808   
Profit $9,400    $-17,380   



If X Company drops Product B because it shows a loss and is able to use the vacant space to increase sales of Product A by $29,800, with $4,000 of additional fixed costs, what will be the effect on firm profits?

Business   Accounting   
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Answer #1

The answer has been presenetd in the supporting sheet. For detailed answer refer to the supporting sheet.

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