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

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

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

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05 Jan 2014, 21:01

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

Sol: Let x be the number of items that must be sold to make a annual profit of $150000. Now Profit= Selling Price - Cost Price

Thus we have 150000= 15x - (130000+8x)-----> 20000= 7x ------> We don't even have to caculate this value because Barring Option A all the other options are automatically ruled out. Ans is A _________________

“If you can't fly then run, if you can't run then walk, if you can't walk then crawl, but whatever you do you have to keep moving forward.”

Last edited by WoundedTiger on 06 Jan 2014, 02:56, edited 2 times in total.

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06 Jan 2014, 02:41

3

This post received KUDOS

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

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

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06 Jan 2014, 02:57

WoundedTiger wrote:

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

Sol: Let x be the number of items that must be sold to make a annual profit of $150000. Now Profit= Selling Price - Cost Price

Thus we have 150000= 15x - (130000+8x)-----> 20000= 7x ------> We don't even have to caculate this value because Barring Option A all the other options are automatically ruled out. Ans is A

God Help me......I can do better....7x=280000 and x=40000. Ans E
_________________

“If you can't fly then run, if you can't run then walk, if you can't walk then crawl, but whatever you do you have to keep moving forward.”

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

The difference of Selling and variable cost is : $7. Now the seller has to make a profit of $150k on top of fixed cost of $130k , so N * 7 = $280k Now pick up the easiest option to verify, Option E) is the easiest to test and satisfies the equation beautifully. Option E)
_________________

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

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12 Jul 2015, 01:50

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23 Jul 2016, 04:30

Hello from the GMAT Club BumpBot!

Thanks to another GMAT Club member, I have just discovered this valuable topic, yet it had no discussion for over a year. I am now bumping it up - doing my job. I think you may find it valuable (esp those replies with Kudos).

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