Extreme Sports manufactures and sells 10 different models of adventure gear. Extreme Sports is contemplating a...
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Extreme Sports manufactures and sells 10 different models of adventure gear. Extreme Sports 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 XX5001, XX5003, XX5005, and XX5007. The other six models (XX5002, XX5004, XX5006, XX5008, XX5009, and XX5010) are expected to see a 6% increase in sales volume. Assess the impact of the price cut on Extreme Sports’ profits and prepare a balance sheet.
Model
Sales Price
Variable Costs
Sales Volume
XX5001
$95
$45
2,000
XX5002
$105
$50
2,500
XX5003
$115
$55
3,000
XX5004
$125
$60
3,500
XX5005
$135
$65
4,000
XX5006
$145
$70
4,500
XX5007
$155
$75
5,000
XX5008
$165
$80
5,500
XX5009
$175
$85
6,000
XX5010
$185
$90
6,500
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