Pricing and impact on demand Columbia Bicycle Company manufactures and sells 12 different models of bicycles. Columbia is contemplating a 5% price cut across the board for all 12 models. It expects the price cut to result in an 8% in¬ crease in the number of units sold of models Ml24, Ml26, Ml28, W124, W126, and W128. Columbia expects the other six models (B112, B116, B120, G112, G116, and G120) to experience a 4% increase in the number of units sold.

The following are the sales prices, variable costs, and sales volume (units) at present. You are required to assess the impact of the price cut on Columbia's profits.(LO 2, 3)

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MODEL SALES PRICE VARIABLE COSTS SALES VOLUME B112 $60 $30 3,000 B116 70 33 4,500 B120 80 36 5,000 G112 60 30 4,000 G116 70 33 4,000 G120 80 36 4,000 M124 100 42 5,000 M126 120 46 5,000 M128 140 50 10,000 W124 100 42 6,000 W126 120 46 7,000 W128 140 40 6,000