(Solved):The following information is for X Company’s two products, A and B: Product A Product B Revenue…

 

Question

The following information is for X Company’s two products, A and B:

Product A Product B
Revenue $89,000 $95,000
Total variable costs 52,510 49,400
Total contribution margin $36,490 $45,600
Total fixed costs Avoidable 14,515 33,559
Unavoidable 12,365 24,301
Profit $9,610 $-12,260

1. If X Company drops Product B because it shows a loss, what will be the effect on firm profits?

2. Assume that if X Company drops Product B, it can use the vacant

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