(Solved) : Following Budgeted Profit Functions X Company S Two Products B Next Year Product P 45 R 58 Q32967783 . . . .

The following are the budgeted profit functions for X Company’stwo products, A and B, next year:

Product A:   P = .45 (R) – $58,720

Product B:   P = .42 (R) – $26,420

where R is revenue. Budgeted revenue for the two products are$86,000 and $93,000, respectively. Unavoidable fixed costs for thetwo products are $21,726 and $11,889, respectively. The company isconsidering dropping Product A; if it does, the resulting freed-upresources can be used to increase revenue from sales of Product Bby $18,300, with no additional fixed costs.

1. If X Company drops A and increases revenue from B, firmprofits will change by________

Expert Answer

An