The following information is for X Company's two products, A and B: ...
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Accounting
The following information is for X Company's two products, A and B:
Product A
Product B
Revenue
$87,000
$87,000
Total contribution margin
35,670
40,890
Total fixed costs
32,080
50,320
Profit
$3,590
$-9,430
$18,286 of Product A's fixed costs are avoidable; $28,682 of Product B's fixed costs are avoidable. X Company plans to drop Product B since it shows a loss and increase sales of Product A by $36,800. Accompanying the sales increase will be a fixed cost increase of $3,600. If X Company drops Product B and increases Product A sales, what will be the effect on firm profits?
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