Elite Bikes manufactures and sells 12 different models of high-end bicycles. Elite Bikes is contemplating a 5% price cut across all 12 models. It expects the price cut to result in an 8% increase in the number of units sold for models I901, I903, I905, and I907. The other eight models (I902, I904, I906, I908, I909, I910, I911, and I912) are expected to see a 4% increase in sales volume. Assess the impact of the price cut on Elite Bikes’ profits and prepare a retained earnings statement.
•Model: I901
oSales Price: $200
oVariable Costs: $90
oSales Volume: 1,500
•Model: I902
oSales Price: $210
oVariable Costs: $95
oSales Volume: 2,000
•Model: I903
oSales Price: $220
oVariable Costs: $100
oSales Volume: 2,500
•Model: I904
oSales Price: $230
oVariable Costs: $105
oSales Volume: 3,000
•Model: I905
oSales Price: $240
oVariable Costs: $110
oSales Volume: 3,500
•Model: I906
oSales Price: $250
oVariable Costs: $115
oSales Volume: 4,000
•Model: I907
oSales Price: $260
oVariable Costs: $120
oSales Volume: 4,500
•Model: I908
oSales Price: $270
oVariable Costs: $125
oSales Volume: 5,000
•Model: I909
oSales Price: $280
oVariable Costs: $130
oSales Volume: 2,200
•Model: I910
oSales Price: $290
oVariable Costs: $135
oSales Volume: 1,800
•Model: I911
oSales Price: $300
oVariable Costs: $140
oSales Volume: 1,500
•Model: I912
oSales Price: $310
oVariable Costs: $145
oSales Volume: 1,200