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Adventure Gear Unlimited manufactures and sells 12 different models of adventure gear. Adventure Gear Unlimited is...

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Accounting

Adventure Gear Unlimited manufactures and sells 12 different models of adventure gear. Adventure Gear Unlimited is contemplating a 5% price cut across all 12 models. It expects the price cut to result in a 9% increase in the number of units sold for models RR4401, RR4403, RR4405, and RR4407. The other eight models (RR4402, RR4404, RR4406, RR4408, RR4409, RR4410, RR4411, and RR4412) are expected to see a 6% increase in sales volume. Assess the impact of the price cut on Adventure Gear Unlimited’s profits and prepare a profit and loss statement.

Model

Sales Price

Variable Costs

Sales Volume

RR4401

$75

$35

2,000

RR4402

$85

$40

2,500

RR4403

$95

$45

3,000

RR4404

$105

$50

3,500

RR4405

$115

$55

4,000

RR4406

$125

$60

4,500

RR4407

$135

$65

5,000

RR4408

$145

$70

5,500

RR4409

$155

$75

6,000

RR4410

$165

$80

6,500

RR4411

$175

$85

7,000

RR4412

$185

$90

7,500

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