Extreme Gear manufactures and sells 8 different models of adventure gear. Extreme Gear is contemplating a...
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Extreme Gear manufactures and sells 8 different models of adventure gear. Extreme Gear is contemplating a 5% price cut across all 8 models. It expects the price cut to result in a 10% increase in the number of units sold for models TT4601, TT4603, TT4605, and TT4607. The other four models (TT4602, TT4604, TT4606, and TT4608) are expected to see a 6% increase in sales volume. Assess the impact of the price cut on Extreme Gear’s profits and prepare a balance sheet.
Model | Sales Price | Variable Costs | Sales Volume |
TT4601 | $85 | $40 | 2,000 |
TT4602 | $95 | $45 | 2,500 |
TT4603 | $105 | $50 | 3,000 |
TT4604 | $115 | $55 | 3,500 |
TT4605 | $125 | $60 | 4,000 |
TT4606 | $135 | $65 | 4,500 |
TT4607 | $145 | $70 | 5,000 |
TT4608 | $155 | $75 | 5,500 |
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