The following are the budgeted profit functions for X Company’stwo products, A and B, next year:
Product A: P = .42 (R) – $30,730
Product B: P = .43 (R) – $50,800
where R is revenue. Budgeted revenue for the two products are$95,000 and $91,000, respectively. Unavoidable fixed costs for thetwo products are $11,677 and $20,320, respectively. The company isconsidering dropping Product B; if it does, the resulting freed-upresources can be used to increase revenue from sales of Product Aby $18,900, with no additional fixed costs.
If X Company drops B and increases revenue from A, firm profitswill change by
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