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Halfway Industries produces two products. Information about the products is as follows:
Clocks Headphones
Units produced and sold 8,000 20,000
Selling price per unit $16 $14
Variable costs per unit 10 9
The company's fixed costs totaled $140,000, of which $30,000 can be directly traced to Clocks and $90,000 can be directly traced to Headphones.
Required: What would be the effect on the firm's profits if the Headphone product is dropped:
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