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Question 9 (2 points) Leone Ltd makes two brands of Stetson hats. The Good has variable costs of 12, and the Bad has variable costs
Question 9 (2 points) Leone Ltd makes two brands of Stetson hats. The "Good" has variable costs of 12, and the "Bad" has variable costs of 9. They utilise a markup of 50%. Annual sales of The Good is 8,000 units and for The Bad is 6,000 units. Leone is reviewing a proposal to add the "Ugly" to their range. The Ugly is expected to sell 5,000 units per annum at a variable cost of 10. Producing the Ugl would require reducing production of either the Good or The Bad by 1000 units, and incur additional fixed costs of 10,000 per annum. If the Ugly also has a 50% markup, what would be the additional profit per annum of the optimal outcome? 9,000 10,500 O 15,000 25,000
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