A computer manufacturer produces a certain electronic component at a c

Answer = E. $192

Total cost price per unit \(= \frac{16500 + 150*82}{150} = 110 + 82 = 192\)

Minimum selling price should be 192

VERITAS PREP OFFICIAL SOLUTION:

Solution: E. For the costs to equal the revenues, align all the costs on one side of the equation and then the revenues on the other: Cost = Revenue.

The costs consist of the $16,500 fixed cost plus $82 per unit, so the costs are 16500 + 82(150). The revenue is the sale price times the number of units, which we know is 150. So our equation is:

16500 + 82(150) = x(150)

Rather than multiply 82 by 150, you may want to finagle the algebra to make it quicker. If you get the 150s on the same side, you can factor them:

16500 = x(150) - 82(150) 16500 = 150(x - 82) 16500/150 = x - 82

Now you can do the division on the left:

16500/150 = 1650/15 = 110

And so 110 = x - 82. Add 82 to both sides and you have your answer: x = 192, answer choice E.

We are given that each electronic component made costs 80 dollars per component, shipping costs are 2 dollars per unit, and fixed costs = 16,500 dollars per month. We are also given that 150 components are sold in a month, and we need to determine the lowest selling price such that costs ≤ revenues. If we let p = the selling price for each component, we can create the following inequality:

80(150) + 2(150) + 16,500 ≤ 150p

Dividing the entire inequality by 150, we have:

80 + 2 + 110 ≤ p

192 ≤ p

When p ≤ 192, costs do not exceed revenues; thus, $192 is the minimum selling price.

Answer: E

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