8 pt The following information is for X Companys two product

8 pt The following information is for X Company\'s two products - A and B: Product A Product B Sales Total contribution margin Fixed costs $93,000 37,200 $92,000 36,800 Avoidable Unavoidable 21,000 7,000 $9,200 38,000 29,000 $-30,200 Profit The company is considering dropping Prod B bease of the $30,200 loss. If X Company drops Prouct B, it w use the freed-up resources to increase sales of Product A by $17,000. If X Company drops Produet B and increases sales of A, firn profits will change by 3. AO S4,523 B?$6,015 CO $8.000 DO $10.640 EO $14.151 FO S18.821

Solution

Answer Option C.$8,000 Explanation: Sales 93,000 Contribution Margin 37,200 Contribution Margin to Sales 0.4 Increase in Contribution from A(17,000 X0.4) 6,800 Unavoiable Fixed costs of Product B -29,000 Avioded Loss from Product B 30,200 8,000