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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

Kudos [?]: 20 [0], given: 0

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

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16 Nov 2010, 16:50
00:00

Difficulty:

55% (hard)

Question Stats:

71% (02:31) correct 29% (03:29) wrong based on 70 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
[Reveal] Spoiler: OA

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tejh

Kudos [?]: 20 [0], given: 0

Manager
Joined: 10 Sep 2010
Posts: 127

Kudos [?]: 37 [1], given: 7

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

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16 Nov 2010, 16:56
1
KUDOS
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

Kudos [?]: 37 [1], given: 7

Manager
Joined: 01 Nov 2010
Posts: 173

Kudos [?]: 50 [0], given: 20

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

Kudos [?]: 50 [0], given: 20

Veritas Prep GMAT Instructor
Joined: 16 Oct 2010
Posts: 7676

Kudos [?]: 17383 [1], given: 232

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

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22 Nov 2010, 19:29
1
KUDOS
Expert's post
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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Karishma
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Get started with Veritas Prep GMAT On Demand for $199 Veritas Prep Reviews Kudos [?]: 17383 [1], given: 232 Director Status: Tutor - BrushMyQuant Joined: 05 Apr 2011 Posts: 622 Kudos [?]: 770 [1], given: 59 Location: India Concentration: Finance, Marketing Schools: XLRI (A) GMAT 1: 700 Q51 V31 GPA: 3 WE: Information Technology (Computer Software) Re: A company produces 450 units of a particular computer component every [#permalink] ### Show Tags 10 Jul 2015, 06:51 1 This post received KUDOS 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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Kudos [?]: 770 [1], given: 59

Re: A company produces 450 units of a particular computer component every   [#permalink] 10 Jul 2015, 06:51
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