Question
Summit Sports manufactures and sells 10 different models of sports equipment. Summit Sports is contemplating a 6% price cut across all 10 models. It expects
Summit Sports manufactures and sells 10 different models of sports equipment. Summit Sports is contemplating a 6% price cut across all 10 models. It expects the price cut to result in a 9% increase in the number of units sold for models U2101, U2103, U2105, and U2107. The other six models (U2102, U2104, U2106, U2108, U2109, and U2110) are expected to see a 6% increase in sales volume. Assess the impact of the price cut on Summit Sports’ profits.
Model | Sales Price | Variable Costs | Sales Volume |
U2101 | $100 | $45 | 1,000 |
U2102 | $110 | $50 | 1,500 |
U2103 | $120 | $55 | 2,000 |
U2104 | $130 | $60 | 2,500 |
U2105 | $140 | $65 | 3,000 |
U2106 | $150 | $70 | 3,500 |
U2107 | $160 | $75 | 4,000 |
U2108 | $170 | $80 | 4,500 |
U2109 | $180 | $85 | 5,000 |
U2110 | $190 | $90 | 5,500 |
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