(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 $92,000 $94,000
Total variable costs 52,440 53,580
Total contribution margin $39,560 $40,420
Total fixed costs
Avoidable 18,986 33,942
Unavoidable 13,194 22,628
Profit $7,380 $-16,150
  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 space to increase sales
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