The following income statement is for X Company's two products, A and B: ...
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Accounting
The following income statement is for X Company's two products, A and B:
Product A
Product B
Revenue
$93,000
$85,000
Total variable costs
53,940
51,000
Total contribution margin
$39,060
$34,000
Total fixed costs
Avoidable
28,286
18,266
Unavoidable
22,224
12,694
Profit
$-11,450
$3,040
If X Company drops Product A because it shows a loss and is able to use the vacant space to increase sales of Product B by $26,000, with $5,000 of additional fixed costs, what will be the effect on firm profits?
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