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The total cost for Company X to produce a batch of tools is

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The total cost for Company X to produce a batch of tools is [#permalink] New post 25 Feb 2007, 20:50
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89% (04:46) correct 11% (01:14) wrong based on 418 sessions
The total cost for Company X to produce a batch of tools is $10,000 plus $3 per tool. Each tool sells for $8. The gross profit earned from producing and selling these tools is the total income from sales minus the total production cost. If a batch of 20,000 tools is produced and sold, then Company X’s gross profit per tool is

(A) $3.00
(B) $3.75
(C) $4.50
(D) $5.00
(E) $5.50

I keep getting an answer different from OA, and I know I must be missing something simple
[Reveal] Spoiler: OA

Last edited by Bunuel on 07 Apr 2012, 12:02, edited 2 times in total.
Edited the question and added the OA
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 [#permalink] New post 26 Feb 2007, 01:13
I just did it real quickly and got 4.50.

Basically 90,000/20,000.
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 [#permalink] New post 26 Feb 2007, 04:05
[(8-3)xno. of tools - 10.000]/no of tools is the answer which is
90,000/20,000=4.5
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 [#permalink] New post 26 Feb 2007, 12:26
oh I see what I did wrong, I ended up with 170,000 - 70,000 meaning I incoroprated the 10,000 in the profits, when it was only part of the cost

Thanks
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Re: The total cost for Company X to produce a batch of tools is [#permalink] New post 07 Apr 2012, 11:53
Can someone explain this please? thanks.
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Re: The total cost for Company X to produce a batch of tools is [#permalink] New post 07 Apr 2012, 12:07
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mymbadreamz wrote:
Can someone explain this please? thanks.


The total cost for Company X to produce a batch of tools is $10,000 plus $3 per tool. Each tool sells for $8. The gross profit earned from producing and selling these tools is the total income from sales minus the total production cost. If a batch of 20,000 tools is produced and sold, then Company X’s gross profit per tool is

(A) $3.00
(B) $3.75
(C) $4.50
(D) $5.00
(E) $5.50

The total production cost of 20,000 tools is $10,000 + $3*20,000 = $70,000;
The total income from sales of 20,000 tools is $8*20,000 = $160,000;

The gross profit earned is $160,000 - $70,000 = $90,000;
The gross profit per tool is $90,000/20,000 = $4.50.

Answer: C.

Hope it's clear.
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Re: The total cost for Company X [#permalink] New post 06 May 2012, 23:31
Expert's post
sravanth wrote:
The total cost for Company X to produce a batch of tools is $10,000 plus $3 per tool. Each tool sells for $8. The gross profit earned from producing and selling these tools is the total income from sales minus the total production cost. If a batch of 20,000 tools is produced and sold, then Company X’s gross profit per tool is

(A) $3.00
(B) $3.75
(C) $4.50
(D) $5.00
(E) $5.50


Merging similar topics. Please ask if anything remains unclear.
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Re: The total cost for Company X to produce a batch of tools is [#permalink] New post 21 Jun 2012, 00:53
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TC = 10,000 + 3x

TR = 8x

Profit = 8x - 10000 - 3x = 5x - 10000

when x = 20000, Profit = 90000

Profit per x = 90000/20000 = 4.5




terp26 wrote:
The total cost for Company X to produce a batch of tools is $10,000 plus $3 per tool. Each tool sells for $8. The gross profit earned from producing and selling these tools is the total income from sales minus the total production cost. If a batch of 20,000 tools is produced and sold, then Company X’s gross profit per tool is

(A) $3.00
(B) $3.75
(C) $4.50
(D) $5.00
(E) $5.50

I keep getting an answer different from OA, and I know I must be missing something simple
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Re: The total cost for Company X to produce a batch of tools is [#permalink] New post 10 Jan 2014, 00:46
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Re: The total cost for Company X to produce a batch of tools is [#permalink] New post 10 Jan 2014, 00:50
terp26 wrote:
The total cost for Company X to produce a batch of tools is $10,000 plus $3 per tool. Each tool sells for $8. The gross profit earned from producing and selling these tools is the total income from sales minus the total production cost. If a batch of 20,000 tools is produced and sold, then Company X’s gross profit per tool is

(A) $3.00
(B) $3.75
(C) $4.50
(D) $5.00
(E) $5.50

I keep getting an answer different from OA, and I know I must be missing something simple



Step 1) Create equations: [10,000 + 3*X = Total Cost] [5*X = Revenue] [Gross Profit = TC - R]

Step 2) Insert the variable: We are given X = 20,000 so Total cost = 70,000, Revenue = 160,000 and Gross Profit = 90,000

Now, the gross profit per tool is exactly what it says, Gross Profit/X ----> 90,000/20,000 ----> 4.5 USD per tool
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Re: The total cost for Company X to produce a batch of tools is [#permalink] New post 11 Sep 2014, 05:43
terp26 wrote:
The total cost for Company X to produce a batch of tools is $10,000 plus $3 per tool. Each tool sells for $8. The gross profit earned from producing and selling these tools is the total income from sales minus the total production cost. If a batch of 20,000 tools is produced and sold, then Company X’s gross profit per tool is

(A) $3.00
(B) $3.75
(C) $4.50
(D) $5.00
(E) $5.50

I keep getting an answer different from OA, and I know I must be missing something simple



production cost = 10000 + (3*20000 ) = 70000

selling cost = 20000* 8 = 160000

160000-70000 = 90000/20000 = 4.5
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Re: The total cost for Company X to produce a batch of tools is [#permalink] New post 11 Sep 2014, 07:02
This problem is simple but was hard for me at first. The way I ended up with a solution was seeing that each tool made $5 each and the 10,000 cost of production spread over 20,000 tools meant each tool had an additional cost of .50 making individual profit 4.50 per tool.
Re: The total cost for Company X to produce a batch of tools is   [#permalink] 11 Sep 2014, 07:02
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