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Peak Performance manufactures and sells 11 different models of athletic wear. Peak Performance is contemplating a...

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Accounting

Peak Performance manufactures and sells 11 different models of athletic wear. Peak Performance is contemplating a 5% price cut across the board for all 11 models. It expects the price cut to result in an 8% increase in the number of units sold for models K1101, K1103, K1105, and K1107. The other seven models (K1102, K1104, K1106, K1108, K1109, K1110, and K1111) are expected to see a 4% increase in sales volume. Assess the impact of the price cut on Peak Performance’s profits.

Model

Sales Price

Variable Costs

Sales Volume

K1101

$70

$35

1,000

K1102

$80

$40

1,500

K1103

$90

$45

2,000

K1104

$100

$50

2,500

K1105

$110

$55

3,000

K1106

$120

$60

3,500

K1107

$130

$65

4,000

K1108

$140

$70

4,500

K1109

$150

$75

5,000

K1110

$160

$80

5,500

K1111

$170

$85

6,000

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