Extreme Gear manufactures and sells 8 different models of adventure gear. Extreme Gear is contemplating a...
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Extreme Gear manufactures and sells 8 different models of adventure gear. Extreme Gear is contemplating a 5% price cut across all 8 models. It expects the price cut to result in a 10% increase in the number of units sold for models TT4601, TT4603, TT4605, and TT4607. The other four models (TT4602, TT4604, TT4606, and TT4608) are expected to see a 6% increase in sales volume. Assess the impact of the price cut on Extreme Gear’s profits and prepare a balance sheet.
Model
Sales Price
Variable Costs
Sales Volume
TT4601
$85
$40
2,000
TT4602
$95
$45
2,500
TT4603
$105
$50
3,000
TT4604
$115
$55
3,500
TT4605
$125
$60
4,000
TT4606
$135
$65
4,500
TT4607
$145
$70
5,000
TT4608
$155
$75
5,500
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