Question
Mountain Adventures manufactures and sells 9 different models of adventure gear. Mountain Adventures is contemplating a 4% price cut across all 9 models. It expects
Mountain Adventures manufactures and sells 9 different models of adventure gear. Mountain Adventures is contemplating a 4% 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 Z2601, Z2603, Z2605, and Z2607. The other five models (Z2602, Z2604, Z2606, Z2608, and Z2609) are expected to see a 6% increase in sales volume. Assess the impact of the price cut on Mountain Adventures’ profits and prepare a balance sheet.
Model | Sales Price | Variable Costs | Sales Volume |
Z2601 | $100 | $50 | 1,500 |
Z2602 | $110 | $55 | 2,000 |
Z2603 | $120 | $60 | 2,500 |
Z2604 | $130 | $65 | 3,000 |
Z2605 | $140 | $70 | 3,500 |
Z2606 | $150 | $75 | 4,000 |
Z2607 | $160 | $80 | 4,500 |
Z2608 | $170 | $85 | 5,000 |
Z2609 | $180 | $90 | 5,500 |
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