Question

8 pt The following income statement is for X Company and its only two products - A and B: Total Product A Product B $176,090 Sales $86,110 $89,980 99,510 Variable Costs 51,289 48,222 Contribution margin $76.580 $37,888 $38,691 Fixed costs: 62,820 Avoidable 42,350 20,470 36,990 Unavoidable 7,030 29,960 S-34.422 $-23,230 $11.191 Profit Because Product A is showing a loss, X Company is considering dropping it and saving its avoidable fixed costs. If it drops Product A, X Company's new profits will be EO S-16,609 FO S-18,769 8. AO S-10,187 DO S-14,699 CO S-13,008 B S-11,511

Answer 1

Correct answer-----------$-18,769

Working

	Product A	Product B		Total
Sales revenue		$    89,980.00		$      89,980.00
Variable costs		$    51,289.00		$      51,289.00
Contribution margin	$                    -	$    38,691.00		$      38,691.00
Less: Fixed ost				$                     -
Avoidable		$    20,470.00		$      20,470.00
Unavoidable	$     29,960.00	$      7,030.00		$      36,990.00
Operating profit (Loss)	$   (29,960.00)	$    11,191.00		$   (18,769.00)