Question
Peak Performance Ltd. manufactures and sells 8 different models of sports gear. Peak Performance Ltd. is contemplating a 6% price cut across all 8 models.
Peak Performance Ltd. manufactures and sells 8 different models of sports gear. Peak Performance Ltd. is contemplating a 6% price cut across all 8 models. It expects the price cut to result in an 8% increase in the number of units sold for models WW4901, WW4903, and WW4905. The other five models (WW4902, WW4904, WW4906, WW4907, and WW4908) are expected to see a 5% increase in sales volume. Assess the impact of the price cut on Peak Performance Ltd.’s profits.
Model | Sales Price | Variable Costs | Sales Volume |
WW4901 | $80 | $40 | 1,800 |
WW4902 | $90 | $45 | 2,000 |
WW4903 | $100 | $50 | 2,500 |
WW4904 | $110 | $55 | 3,000 |
WW4905 | $120 | $60 | 3,500 |
WW4906 | $130 | $65 | 4,000 |
WW4907 | $140 | $70 | 4,500 |
WW4908 | $150 | $75 | 5,000 |
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