Question
Adventure Trails manufactures and sells 9 different models of adventure gear. Adventure Trails is contemplating a 6% price cut across all 9 models. It expects
Adventure Trails manufactures and sells 9 different models of adventure gear. Adventure Trails is contemplating a 6% price cut across all 9 models. It expects the price cut to result in a 10% increase in the number of units sold for models P1601, P1603, and P1605. The other six models (P1602, P1604, P1606, P1607, P1608, and P1609) are expected to see a 7% increase in sales volume. Assess the impact of the price cut on Adventure Trails’ profits and prepare a cash flow statement.
Model | Sales Price | Variable Costs | Sales Volume |
P1601 | $75 | $35 | 1,500 |
P1602 | $85 | $40 | 2,000 |
P1603 | $95 | $45 | 2,500 |
P1604 | $105 | $50 |
Model | Sales Price | Variable Costs | Sales Volume |
P1604 | $105 | $50 | 3,000 |
P1605 | $115 | $55 | 3,500 |
P1606 | $125 | $60 | 4,000 |
P1607 | $135 | $65 | 4,500 |
P1608 | $145 | $70 | 5,000 |
P1609 | $155 | $75 | 5,500 |
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