Dropping a Product line

timer Asked: Apr 9th, 2015

Question description

The following information is for X Company's two products, A and B:

Product AProduct B
Revenue$87,000 $87,000 
Total variable costs48,720 48,720 
Total fixed costs59,860 32,700 
Profit$-21,580 $5,580 

$46,092 of Product A's fixed costs are unavoidable; $29,430 of Product B's fixed costs are unavoidable. Because Product A appears to be losing money, X Company is considering dropping it. If it does, it can use the freed-up resources to increase sales of Product B by $23,900, but $7,800 of additional fixed costs will be incurred. If X Company drops Product A and increases Product B sales, firm profits will fall by

Tutor Answer

(Top Tutor) Studypool Tutor
School: University of Virginia
Studypool has helped 1,244,100 students
flag Report DMCA
Similar Questions
Hot Questions
Related Tags

Brown University

1271 Tutors

California Institute of Technology

2131 Tutors

Carnegie Mellon University

982 Tutors

Columbia University

1256 Tutors

Dartmouth University

2113 Tutors

Emory University

2279 Tutors

Harvard University

599 Tutors

Massachusetts Institute of Technology

2319 Tutors

New York University

1645 Tutors

Notre Dam University

1911 Tutors

Oklahoma University

2122 Tutors

Pennsylvania State University

932 Tutors

Princeton University

1211 Tutors

Stanford University

983 Tutors

University of California

1282 Tutors

Oxford University

123 Tutors

Yale University

2325 Tutors