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ProCycle manufactures and sells 8 different models of bicycles. ProCycle is contemplating a 4% price cut...

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Accounting

ProCycle manufactures and sells 8 different models of bicycles. ProCycle is contemplating a 4% price cut across all 8 models. It expects the price cut to result in a 9% increase in the number of units sold for models O1501, O1503, and O1505. The other five models (O1502, O1504, O1506, O1507, and O1508) are expected to see a 5% increase in sales volume. Assess the impact of the price cut on ProCycle’s profits and prepare the retained earnings statement.

Model

Sales Price

Variable Costs

Sales Volume

O1501

$120

$60

1,000

O1502

$130

$65

1,500

O1503

$140

$70

2,000

O1504

$150

$75

2,500

O1505

$160

$80

3,000

O1506

$170

$85

3,500

O1507

$180

$90

4,000

O1508

$190

$95

4,500

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