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A certain manufacturer produces items for which the producti

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A certain manufacturer produces items for which the producti [#permalink]

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New post 01 Mar 2011, 09:16
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A
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E

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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
[Reveal] Spoiler: OA

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.

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

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

Ans: "E"
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New post 12 Sep 2013, 02:30
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

Last edited by jitenrajput9 on 12 Sep 2013, 02:48, edited 1 time in total.

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New post 12 Sep 2013, 02:46
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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


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Re: A certain manufacturer produces items for which the producti [#permalink]

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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

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Re: A certain manufacturer produces items for which the producti [#permalink]

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Re: A certain manufacturer produces items for which the producti [#permalink]

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New post 19 Sep 2017, 18:11
it is just cool math!!!
just follow this rule:-

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

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A certain manufacturer produces items for which the producti [#permalink]

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New post 20 Sep 2017, 10:32
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 = 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.

Answer E

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A certain manufacturer produces items for which the producti   [#permalink] 20 Sep 2017, 10:32
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