Extreme Sports manufactures and sells 10 different models of adventure gear. Extreme Sports is contemplating a...
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Extreme Sports manufactures and sells 10 different models of adventure gear. Extreme Sports is contemplating a 5% price cut across all 10 models. It expects the price cut to result in a 10% increase in the number of units sold for models XX5001, XX5003, XX5005, and XX5007. The other six models (XX5002, XX5004, XX5006, XX5008, XX5009, and XX5010) are expected to see a 6% increase in sales volume. Assess the impact of the price cut on Extreme Sports’ profits and prepare a balance sheet.
Model | Sales Price | Variable Costs | Sales Volume |
XX5001 | $95 | $45 | 2,000 |
XX5002 | $105 | $50 | 2,500 |
XX5003 | $115 | $55 | 3,000 |
XX5004 | $125 | $60 | 3,500 |
XX5005 | $135 | $65 | 4,000 |
XX5006 | $145 | $70 | 4,500 |
XX5007 | $155 | $75 | 5,000 |
XX5008 | $165 | $80 | 5,500 |
XX5009 | $175 | $85 | 6,000 |
XX5010 | $185 | $90 | 6,500 |
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