Eco-Friendly Bikes manufactures and sells 9 different models of eco-friendly bikes. Eco-Friendly Bikes is contemplating a...
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Eco-Friendly Bikes manufactures and sells 9 different models of eco-friendly bikes. Eco-Friendly Bikes is contemplating a 6% price cut across all 9 models. It expects the price cut to result in a 10% increase in the number of units sold for models F601, F603, F605, and F607. The other five models (F602, F604, F606, F608, and F609) are expected to see a 7% increase in sales volume. Assess the impact of the price cut on Eco-Friendly Bikes’ profits and prepare a cash flow statement.
Model
Sales Price
Variable Costs
Sales Volume
F601
$90
$40
2,500
F602
$100
$45
3,000
F603
$110
$50
3,500
F604
$120
$55
4,000
F605
$130
$60
4,500
F606
$140
$65
2,800
F607
$150
$70
2,200
F608
$160
$75
1,800
F609
$170
$80
1,500
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