Eco-Friendly Bikes manufactures and sells 9 different models of eco-friendly bikes. Eco-Friendly Bikes is contemplating a...
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Eco-Friendly Bikes manufactures and sells 9 different models of eco-friendly bikes. Eco-Friendly Bikes is contemplating a 6% price cut across all 9 models. It expects the price cut to result in a 10% increase in the number of units sold for models F601, F603, F605, and F607. The other five models (F602, F604, F606, F608, and F609) are expected to see a 7% increase in sales volume. Assess the impact of the price cut on Eco-Friendly Bikes’ profits and prepare a cash flow statement.
Model | Sales Price | Variable Costs | Sales Volume |
F601 | $90 | $40 | 2,500 |
F602 | $100 | $45 | 3,000 |
F603 | $110 | $50 | 3,500 |
F604 | $120 | $55 | 4,000 |
F605 | $130 | $60 | 4,500 |
F606 | $140 | $65 | 2,800 |
F607 | $150 | $70 | 2,200 |
F608 | $160 | $75 | 1,800 |
F609 | $170 | $80 | 1,500 |
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