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# A company produces 450 units of a particular computer component every

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Intern
Joined: 22 Sep 2010
Posts: 9
A company produces 450 units of a particular computer component every  [#permalink]

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16 Nov 2010, 16:50
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Difficulty:

55% (hard)

Question Stats:

65% (02:49) correct 35% (03:12) wrong based on 116 sessions

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A company produces 450 units of a particular computer component every month, at a production cost to the company of $110 per component, and sells all of the components by the end of each month. What is the minimum selling price per component that will guarantee that the yearly profit (revenue from sales minus production costs) will be at least$626,400 ?

A. 226
B. 230
C. 240
D. 260
E. 280

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Manager
Joined: 10 Sep 2010
Posts: 117
Re: A company produces 450 units of a particular computer component every  [#permalink]

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16 Nov 2010, 16:56
1
I pick "A"

You need to set up an equation.

450*12(x-110)=626400

where x is a selling cost of one item
x-110, is a profit from one item

450 - number of items produced and sold per month
12 - is a number of month in a year

Simplifying the equation will lead to x-110=116, then x = 226
Manager
Joined: 01 Nov 2010
Posts: 119
Location: Zürich, Switzerland
Re: A company produces 450 units of a particular computer component every  [#permalink]

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18 Nov 2010, 16:56
simple but time consuming...

incurring profit 626400 is equal to incur profit 52200 per month.

total production cost = 450*110= 49500
Total selling price = 49500+52200=101700

Thus price per equipment= 101700/450 = 226

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Re: A company produces 450 units of a particular computer component every  [#permalink]

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22 Nov 2010, 19:29
2
Sarang wrote:
simple but time consuming...

incurring profit 626400 is equal to incur profit 52200 per month.

total production cost = 450*110= 49500
Total selling price = 49500+52200=101700

Thus price per equipment= 101700/450 = 226

Hey Sarang,
That's the trick of GMAT. For many questions, there is a long calculation approach and a short cut.
Selling price per item = 110 + $$\frac{626400}{(12*450)}$$
Considering that all options are integers, you know you will end up canceling everything out to obtain 110 + 116 = 226
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Re: A company produces 450 units of a particular computer component every  [#permalink]

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10 Jul 2015, 06:51
1
Please un-tag mixture problems and tag percent/interest
tejhpamarthi wrote:
A company produces 450 units of a particular computer component every month, at a production cost to the company of $110 per component, and sells all of the components by the end of each month. What is the minimum selling price per component that will guarantee that the yearly profit (revenue from sales minus production costs) will be at least$626,400 ?

a)226 b)230 c)240 d)260 e)280

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Re: A company produces 450 units of a particular computer component every  [#permalink]

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21 Mar 2018, 16:20
tejhpamarthi wrote:
A company produces 450 units of a particular computer component every month, at a production cost to the company of $110 per component, and sells all of the components by the end of each month. What is the minimum selling price per component that will guarantee that the yearly profit (revenue from sales minus production costs) will be at least$626,400 ?

A. 226
B. 230
C. 240
D. 260
E. 280

Since $626,400 is the minimum annual profit, thus$626,400/12 = \$52,200 will be the minimum monthly profit. We can let n = the minimum selling price and create the inequality:

450n - 110(450) ≥ 52,200

450n - 49,500 ≥ 52,200

450n ≥ 101,700

n ≥ 226

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Re: A company produces 450 units of a particular computer component every   [#permalink] 21 Mar 2018, 16:20
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