The following information is for X Company's two products, A and B, last year: ...
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Accounting
The following information is for X Company's two products, A and B, last year:
Product A
Product B
Sales
$87,220
$92,900
Total variable costs
52,332
53,882
Total fixed costs
72,150
27,120
Profit
$-37,262
$11,898
Because of the reported loss for Product A, X Company is considering dropping it. Further analysis reveals that $26,760 of Product A's fixed costs and $6,860 of Product B's fixed costs are common costs that the company allocates to the two products.
7. If X Company drops Product A, company profits will change by ?
8. Assume that sales of Product B can be increased by $17,880 if Product A is dropped. What will be the effect of this increase on company profits?
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