Summit Gear Inc. manufactures and sells 7 different models of outdoor gear. Summit Gear Inc. is contemplating a 4% price cut for all models. It expects the price cut to result in an 8% increase in units sold for models QQ4301, QQ4303, and QQ4305. The other four models (QQ4302, QQ4304, QQ4306, and QQ4307) are expected to see a 5% increase in sales volume. Assess the impact of the price cut on Summit Gear Inc.’s profits and prepare the equity statement.
•Model: QQ4301
oSales Price: $75
oVariable Costs: $35
oSales Volume: 2,000
•Model: QQ4302
oSales Price: $85
oVariable Costs: $40
oSales Volume: 2,500
•Model: QQ4303
oSales Price: $95
oVariable Costs: $45
oSales Volume: 3,000
•Model: QQ4304
oSales Price: $105
oVariable Costs: $50
oSales Volume: 3,500
•Model: QQ4305
oSales Price: $115
oVariable Costs: $55
oSales Volume: 4,000
•Model: QQ4306
oSales Price: $125
oVariable Costs: $60
oSales Volume: 4,500
•Model: QQ4307
oSales Price: $135
oVariable Costs: $65
oSales Volume: 5,000