Questions 7 and 8 refer to the following problem: The following information is f
ID: 2463673 • Letter: Q
Question
Questions 7 and 8 refer to the following problem:
The following information is for X Company's two products, A and B:
Revenue: A)$92,000 B)$89,000
Total variable costs: A)$53,360 B)$53,400
Total contribution margin: A)$38,640 B)$35,600
Total fixed costs:
Avoidable: A)$25,915 B)$17,253
Unavoidable: A)$25,915 B)$14,697
Profit: A)$-13,190 B)$3,650
7. If X Company drops Product A because it shows a loss, what will be the effect on firm profits?________________
8. Assume that if X Company drops Product A, it can use the vacant space to increase sales of Product B by $37,200, but $4,800 of additional fixed costs will be incurred. This use of the vacant space will result in an increase in X Company's profits of_______________________
Only ONE try left for both parts. I posted this earlier and the answer was wrong. Please help and give the right answer!!!
Thank you!
Explanation / Answer
7. If X Company drops Product A because it shows a loss, what will be the effect on firm profits?
Answer: The Total Loss increase from $ 9,540 to $ 35,455.
The working as follows:
8. Assume that if X Company drops Product A, it can use the vacant space to increase sales of Product B by $37,200, but $4,800 of additional fixed costs will be incurred. This use of the vacant space will result in an increase in X Company's profits of $ 10,080
The working as follows:
92000 89000 53360 53400 38640 35600 25915 17253 25915 14697 51830 31950 -13190 3650 -9540 -25915 -35455Related Questions
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