Questions 7 and 8 refer to the following information: The following information

Question

Questions 7 and 8 refer to the following information: The following information is for X Company's two products, A and B, last year: Sales Total variable costs Total fixed costs Profit Product A $92,680 53,754 28,410 $10,516 Product B 93,050 55,830 54,780 $-17,560 Because of the reported loss for Product B, X Company is considering dropping it. Further analysis reveals that $7,440 of Product A's fixed costs and $26,660 of Product B's fixed costs are common costs that the company allocates to the two products. 7. If X Company drops Product B, company profits will change by $-9,100 ou are correct. ur receipt no. is 152-4415Previous Tries 8. Assume that sales of Product A can be increased by $17,990 if Product B is dropped. What will be the effect of this increase on company profits? 782 Submit Answer Tries 3/5 Previous Tries

Explanation / Answer

Dear Student Thank you for using Chegg Please find below the answer and please give thumbs up   Statementshowing Computations Paticulars Product A Product B Total Sales                 92,680.00                 93,050.00               185,730.00 Less Variable Expenses               (53,754.00)               (55,830.00)            (109,584.00) Contribution Margin                 38,926.00                 37,220.00                 76,146.00 Fixed cost               (28,410.00)               (54,780.00)               (83,190.00) Net operating income                 10,516.00               (17,560.00)                 (7,044.00) Q7 Paticulars Product A Product B Total Sales                 92,680.00                                -                   92,680.00 Less Variable Expenses               (53,754.00)                                -                 (53,754.00) Contribution Margin                 38,926.00                                -                   38,926.00 Fixed cost               (28,410.00)               (26,660.00)               (55,070.00) Net operating income                 10,516.00               (26,660.00)               (16,144.00) If x company drops product B profits will change by - 9100 Q8 Paticulars Product A Product B Total Sales               110,670.00                                -                 110,670.00 Less Variable Expenses               (64,188.12)                                -                 (64,188.12) Contribution Margin                 46,481.88                                -                   46,481.88 Fixed cost               (28,410.00)               (26,660.00)               (55,070.00) Net operating income                 18,071.88               (26,660.00)                 (8,588.12) If x company drops product B profits will change by - 1,544.12

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