Questions 7 and 8 refer to the following information: The following information
ID: 2574418 • Letter: Q
Question
Questions 7 and 8 refer to the following information: The following information is for X Company's two products, A and B, last year: Sales Total variable costs Total fixed costs Profit Product A $86,250 50,025 61,440 Product B $94,000 52,640 30,530 $-25,215 $10,830 Because of the reported loss for Product A, X Company is considering dropping it. Further analysis reveals that $27,390 of Product A's fixed costs and $6,750 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 Submit Answer Tries 0/5 8. Assume that sales of Product B can be increased by $17,790 if Product A is dropped. What will be the effect of this increase on company profits? Submit Answer Tries 0/5Explanation / Answer
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Product A Product B Total Sales $ - $ 94,000 $ 94,000 Total variable Cost $ - $ 52,640 $ 52,640 Total Fixed Cost $ 27,390 $ 30,530 $ 57,920 Profit/(loss) $ (27,390) $ 10,830 $ (16,560) Current profit/ (loss) $ (25,215) $ 10,830 $ (14,385) Change in profit/ (loss) $ (2,175)8
Product A Product B Total Sales $ - $ 111,790 $ 111,790 Total variable Cost $ - $ 52,640 $ 52,640 Total Fixed Cost $ 27,390 $ 30,530 $ 57,920 Profit/(loss) $ (27,390) $ 28,620 $ 1,230 Current profit/ (loss) $ (25,215) $ 10,830 $ (14,385) Change in profit/ (loss) $ 15,615Related Questions
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