GMAT Question of the Day - Daily to your Mailbox; hard ones only

 It is currently 15 Jul 2018, 19:43

### GMAT Club Daily Prep

#### Thank you for using the timer - this advanced tool can estimate your performance and suggest more practice questions. We have subscribed you to Daily Prep Questions via email.

Customized
for You

we will pick new questions that match your level based on your Timer History

Track

every week, we’ll send you an estimated GMAT score based on your performance

Practice
Pays

we will pick new questions that match your level based on your Timer History

# A certain manufacturer produces items for which the producti

Author Message
TAGS:

### Hide Tags

Intern
Joined: 26 Feb 2011
Posts: 34
A certain manufacturer produces items for which the producti [#permalink]

### Show Tags

Updated on: 12 Sep 2013, 02:43
1
6
00:00

Difficulty:

15% (low)

Question Stats:

83% (01:15) correct 17% (01:11) wrong based on 167 sessions

### HideShow timer Statistics

A certain manufacturer produces items for which the production costs consist of annual fixed costs totaling \$130,000 and variables costs averaging \$8 per item. If the manufacturer’s selling price per item is \$15, how many items the manufacturer produce and sell to earn an annual profit of \$150,000?

(A) 2,858
(B) 18,667
(C) 21,429
(D) 35,000
(E) 40,000

Originally posted by Madelaine88 on 01 Mar 2011, 09:16.
Last edited by Bunuel on 12 Sep 2013, 02:43, edited 1 time in total.
Renamed the topic, edited the question and added the OA.
Math Forum Moderator
Joined: 20 Dec 2010
Posts: 1900

### Show Tags

01 Mar 2011, 09:26
1
Let the items manufactured or sold be "x"

130000+8x = 15x-150000
7x = 280000
x = 40000

Ans: "E"
_________________
Intern
Joined: 05 Jul 2013
Posts: 4

### Show Tags

Updated on: 12 Sep 2013, 02:48
E is the Right as per view you. Nice calculation provided by fluke to understand the quest.

http://www.somatextiles.com/home.php/te ... g-industry

Originally posted by jitenrajput9 on 12 Sep 2013, 02:30.
Last edited by jitenrajput9 on 12 Sep 2013, 02:48, edited 1 time in total.
Math Expert
Joined: 02 Sep 2009
Posts: 46991
Re: A certain manufacturer produces items for which the producti [#permalink]

### Show Tags

12 Sep 2013, 02:46
A certain manufacturer produces items for which the production costs consist of annual fixed costs totaling \$130,000 and variables costs averaging \$8 per item. If the manufacturer’s selling price per item is \$15, how many items the manufacturer produce and sell to earn an annual profit of \$150,000?

(A) 2,858
(B) 18,667
(C) 21,429
(D) 35,000
(E) 40,000

Similar questions to practice:
marginal-cost-is-the-cost-of-increasing-the-quantity-pr-109332.html
the-expenses-of-a-hostel-are-partly-fixed-and-partly-137287.html
_________________
Intern
Joined: 07 Sep 2013
Posts: 23
Concentration: Entrepreneurship
GPA: 3.52
Re: A certain manufacturer produces items for which the producti [#permalink]

### Show Tags

12 Sep 2013, 22:09
1
If the sell price is \$15 and the cost is \$8 per item, then there's a profit of \$7/item

To make up the \$130,000 fixed cost and make \$150,000 in profit, we need to have \$280,000 in revenue.

7X = 280,000

X = 40,000 items

Choice E

t1000
Intern
Joined: 18 Sep 2017
Posts: 5
Re: A certain manufacturer produces items for which the producti [#permalink]

### Show Tags

19 Sep 2017, 18:11
it is just cool math!!!

no. of manufacturer produce = (fixed costs + expected profit) / (selling price of per unit - variable costs of per unit)

so, (130,000+150,000)/(15-8)
=280,000/7
=40,000
SC Moderator
Joined: 22 May 2016
Posts: 1824
A certain manufacturer produces items for which the producti [#permalink]

### Show Tags

20 Sep 2017, 10:32
A certain manufacturer produces items for which the production costs consist of annual fixed costs totaling \$130,000 and variables costs averaging \$8 per item. If the manufacturer’s selling price per item is \$15, how many items the manufacturer produce and sell to earn an annual profit of \$150,000?

(A) 2,858
(B) 18,667
(C) 21,429
(D) 35,000
(E) 40,000

I eliminated, then backsolved with a shortcut.

Answers A, B, and C have numbers that are absurd. Eliminate them. If GMAT writers require calculations with those numbers in PS, I will risk being wrong over losing too much time for other questions.

Between remaining answers D and E, E looks better: 40,000 is quicker in calculation.

The shortcut: take three zeros off the large numbers. The calculated answer similarly will short by three zeros.

Total revenue = SP * # items
15 * 40 = 600

Total cost = Variable Cost + Fixed Cost

Variable Cost= (cost/item * # items)
Variable Cost = (8 * 40) = 320
Fixed Cost = 130
Total Cost = 320 + 130 = 450

Profit = TR - TC
600 - 450 = 150
That's a match.

_________________

In the depths of winter, I finally learned
that within me there lay an invincible summer.

A certain manufacturer produces items for which the producti   [#permalink] 20 Sep 2017, 10:32
Display posts from previous: Sort by

# Events & Promotions

 Powered by phpBB © phpBB Group | Emoji artwork provided by EmojiOne Kindly note that the GMAT® test is a registered trademark of the Graduate Management Admission Council®, and this site has neither been reviewed nor endorsed by GMAC®.