Madelaine88 wrote:

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 =

600Total cost = Variable Cost + Fixed Cost

Variable Cost= (cost/item * # items)

Variable Cost = (8 * 40) = 320

Fixed Cost = 130

Total Cost = 320 + 130 =

450Profit = TR - TC

600 - 450 =

150That's a match.

Answer E

_________________

In the depths of winter, I finally learned

that within me there lay an invincible summer.

-- Albert Camus, "Return to Tipasa"