Tillerson’s Tidbits manufactures two models, a Basic and Delux. The Basic sells for $10, has unit variable cost of $7 and is expected to sell 60 units per year. The Delux sells for $15, has unit variable cost of $9 and is expected to sell 40 units per year. They are considering selling an SD (super delux) model for $20, with unit variable cost of $15 and expected annual sales of 50 units. 30% of SD sales would come from the Delux model. Another 20% of the SD sales would come from the Basic model. Fixed costs to introduce the new SD model are $100.
a. What is the expected annual profit/loss from the introduction of the SD model.