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Extreme Adventures manufactures and sells 10 different models of adventure gear. Extreme Adventures is contemplating a...

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Accounting

Extreme Adventures manufactures and sells 10 different models of adventure gear. Extreme Adventures is contemplating a 5% price cut across all 10 models. It expects the price cut to result in a 10% increase in the number of units sold for models PP4201, PP4203, PP4205, and PP4207. The other six models (PP4202, PP4204, PP4206, PP4208, PP4209, and PP4210) are expected to see a 6% increase in sales volume. Assess the impact of the price cut on Extreme Adventures’ profits and prepare a balance sheet.

Model

Sales Price

Variable Costs

Sales Volume

PP4201

$95

$45

2,000

PP4202

$105

$50

2,500

PP4203

$115

$55

3,000

PP4204

$125

$60

3,500

PP4205

$135

$65

4,000

PP4206

$145

$70

4,500

PP4207

$155

$75

5,000

PP4208

$165

$80

5,500

PP4209

$175

$85

6,000

PP4210

$185

$90

6,500

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