Adventure Co. manufactures and sells 12 different models of adventure equipment. Adventure Co. is contemplating a 5% price cut for all models. It expects the price cut to result in an 8% increase in units sold for models AA2701, AA2703, and AA2705. The other nine models (AA2702, AA2704, AA2706, AA2707, AA2708, AA2709, AA2710, AA2711, and AA2712) are expected to see a 4% increase in sales volume. Assess the impact of the price cut on Adventure Co.’s profits and prepare the equity statement.
•Model: AA2701
oSales Price: $80
oVariable Costs: $40
oSales Volume: 2,000
•Model: AA2702
oSales Price: $90
oVariable Costs: $45
oSales Volume: 2,500
•Model: AA2703
oSales Price: $100
oVariable Costs: $50
oSales Volume: 3,000
•Model: AA2704
oSales Price: $110
oVariable Costs: $55
oSales Volume: 3,500
•Model: AA2705
oSales Price: $120
oVariable Costs: $60
oSales Volume: 4,000
•Model: AA2706
oSales Price: $130
oVariable Costs: $65
oSales Volume: 4,500
•Model: AA2707
oSales Price: $140
oVariable Costs: $70
oSales Volume: 5,000
•Model: AA2708
oSales Price: $150
oVariable Costs: $75
oSales Volume: 5,500
•Model: AA2709
oSales Price: $160
oVariable Costs: $80
oSales Volume: 6,000
•Model: AA2710
oSales Price: $170
oVariable Costs: $85
oSales Volume: 6,500
•Model: AA2711
oSales Price: $180
oVariable Costs: $90
oSales Volume: 7,000
•Model: AA2712
oSales Price: $190
oVariable Costs: $95
oSales Volume: 7,500