EcoSport manufactures and sells 8 different models of eco-friendly sports gear. EcoSport is contemplating a 5%...
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Accounting
EcoSport manufactures and sells 8 different models of eco-friendly sports gear. EcoSport is contemplating a 5% price cut across all 8 models. It expects the price cut to result in an 8% increase in the number of units sold for models V2201, V2203, V2205, and V2207. The other four models (V2202, V2204, V2206, and V2208) are expected to see a 4% increase in sales volume. Assess the impact of the price cut on EcoSport’s profits and prepare a balance sheet.
Model
Sales Price
Variable Costs
Sales Volume
V2201
$95
$45
1,500
V2202
$105
$50
2,000
V2203
$115
$55
2,500
V2204
$125
$60
3,000
V2205
$135
$65
3,500
V2206
$145
$70
4,000
V2207
$155
$75
4,500
V2208
$165
$80
5,000
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