Outdoor Adventures manufactures and sells 11 different models of outdoor gear. Outdoor Adventures is contemplating a...
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Outdoor Adventures manufactures and sells 11 different models of outdoor gear. Outdoor Adventures is contemplating a 4% price cut across all 11 models. It expects the price cut to result in a 9% increase in the number of units sold for models BB2801, BB2803, BB2805, and BB2807. The other seven models (BB2802, BB2804, BB2806, BB2808, BB2809, BB2810, and BB2811) are expected to see a 6% increase in sales volume. Assess the impact of the price cut on Outdoor Adventures’ profits and prepare a profit and loss statement.
Model | Sales Price | Variable Costs | Sales Volume |
BB2801 | $75 | $35 | 2,000 |
BB2802 | $85 | $40 | 2,500 |
BB2803 | $95 | $45 | 3,000 |
BB2804 | $105 | $50 | 3,500 |
BB2805 | $115 | $55 | 4,000 |
BB2806 | $125 | $60 | 4,500 |
BB2807 | $135 | $65 | 5,000 |
BB2808 | $145 | $70 | 5,500 |
BB2809 | $155 | $75 | 6,000 |
BB2810 | $165 | $80 | 6,500 |
BB2811 | $175 | $85 | 7,000 |
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