Cycling Masters manufactures and sells 8 different models of bicycles. Cycling Masters is contemplating a 6%...
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Cycling Masters manufactures and sells 8 different models of bicycles. Cycling Masters is contemplating a 6% price cut across all 8 models. It expects the price cut to result in an 8% increase in the number of units sold for models Y2501, Y2503, Y2505, and Y2507. The other four models (Y2502, Y2504, Y2506, and Y2508) are expected to see a 5% increase in sales volume. Assess the impact of the price cut on Cycling Masters’ profits.
Model | Sales Price | Variable Costs | Sales Volume |
Y2501 | $80 | $40 | 2,000 |
Y2502 | $90 | $45 | 2,500 |
Y2503 | $100 | $50 | 3,000 |
Y2504 | $110 | $55 | 3,500 |
Y2505 | $120 | $60 | 4,000 |
Y2506 | $130 | $65 | 4,500 |
Y2507 | $140 | $70 | 5,000 |
Y2508 | $150 | $75 | 5,500 |
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