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
$88,000
$89,000
Total variable costs
51,920
52,510
Total contribution margin
$36,080
$36,490
Total fixed costs
Avoidable
29,468
17,535
Unavoidable
25,102
12,185
Profit
$-18,490
$6,770
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 $33,500, with $4,600 of additional fixed costs, what will be the effect on firm profits?
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