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ACME’s manufacturing costs for sets of horseshoes
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14 Feb 2013, 12:19
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79% (02:26) correct 21% (02:29) wrong based on 191 sessions
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ACME’s manufacturing costs for sets of horseshoes include a $11,450 initial outlay, and $19.75 per set. They can sell the sets $52.50. If profit is revenue from sales minus manufacturing costs, and the company produces & sells 987 sets of horseshoes, what was their profit? (A) $20,874.25 (B) $30,943.25 (C) $41,308.50 (D) $51,817.50 (E) $53,624.25
Unless you're Johannes Kepler or Will Hunting, you probably would not be able to do that exact calculation in your head, and of course you get no calculator on the GMAT. With estimation, though, this is a remarkably simple question. For more on the power of estimation on the GMAT, as well as an elegant solution to this question, see: http://magoosh.com/gmat/2012/the-power- ... mat-quant/
Experts, what wisdom and specific tips would you like to share about estimation on the GMAT Quantitative section?
Re: ACME’s manufacturing costs for sets of horseshoes
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13 Aug 2014, 22:45
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mikemcgarry wrote:
ACME’s manufacturing costs for sets of horseshoes include a $11,450 initial outlay, and $19.75 per set. They can sell the sets $52.50. If profit is revenue from sales minus manufacturing costs, and the company produces & sells 987 sets of horseshoes, what was their profit? (A) $20,874.25 (B) $30,943.25 (C) $41,308.50 (D) $51,817.50 (E) $53,624.25
Unless you're Johannes Kepler or Will Hunting, you probably would not be able to do that exact calculation in your head, and of course you get no calculator on the GMAT. With estimation, though, this is a remarkably simple question. For more on the power of estimation on the GMAT, as well as an elegant solution to this question, see: http://magoosh.com/gmat/2012/the-power- ... mat-quant/
Experts, what wisdom and specific tips would you like to share about estimation on the GMAT Quantitative section?
Mike
The OA in this problem have a great variation; so we can use approximation
\(19.75 \approx {20}\)
\(52.50 \approx {50}\)
\(987 \approx {1000}\)
Total Cost Price\(= 11450 + 20*1000 \approx{31000}\)
Re: ACME’s manufacturing costs for sets of horseshoes
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26 Apr 2018, 06:14
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mikemcgarry wrote:
ACME’s manufacturing costs for sets of horseshoes include a $11,450 initial outlay, and $19.75 per set. They can sell the sets $52.50. If profit is revenue from sales minus manufacturing costs, and the company produces & sells 987 sets of horseshoes, what was their profit? (A) $20,874.25 (B) $30,943.25 (C) $41,308.50 (D) $51,817.50 (E) $53,624.25
Here's a slight twist:
It COSTS $19.75 per set, and each set is SOLD for $52.50 So, the company makes approximately $33 per set ($52.50 - $19.75 ≈ $33)
The company sold 987 sets. So, the profit ≈ ($33)(1000) ≈$33,000
Keep in mind, that there's also the initial outlay of $11,450
Re: ACME’s manufacturing costs for sets of horseshoes
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19 Sep 2018, 20:22
mikemcgarry wrote:
ACME’s manufacturing costs for sets of horseshoes include a $11,450 initial outlay, and $19.75 per set. They can sell the sets $52.50. If profit is revenue from sales minus manufacturing costs, and the company produces & sells 987 sets of horseshoes, what was their profit? (A) $20,874.25 (B) $30,943.25 (C) $41,308.50 (D) $51,817.50 (E) $53,624.25
The alternative choices ARE far apart (except the last two ones), therefore we are allowed to use (always carefully!) approximations (to be reconsidered ONLY if we come close to $50,000) !!
Re: ACME’s manufacturing costs for sets of horseshoes
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02 Oct 2018, 19:24
mikemcgarry wrote:
ACME’s manufacturing costs for sets of horseshoes include a $11,450 initial outlay, and $19.75 per set. They can sell the sets $52.50. If profit is revenue from sales minus manufacturing costs, and the company produces & sells 987 sets of horseshoes, what was their profit? (A) $20,874.25 (B) $30,943.25 (C) $41,308.50 (D) $51,817.50 (E) $53,624.25
The profit is:
987(52.50) - [11,450 + 987(19.75)]
987(52.50) - 11,450 - 987(19.75)
987(52.50 - 19.75) - 11,450
987(32.75) - 11,450
At this point, we will approximate 987 as 1,000 and 32.75 as 32. So the approximate total profit is:
1,000(32) - 11,450
32,000 - 11,450
20,550
We see that this is closest to 20,874.25 in choice A.
Alternate Solution:
Let’s round all the numbers. From the final statement of the problem, we know we’ll sell about 1,000 sets. The initial outlay is about 12,000 and manufacturing costs are about (20) (1000) = 20,000. Thus, costs are about 32,000. Revenue is a bit greater than (50)(1000) = 50,000. Thus, revenue - cost = 50,000 - 32,000 = 18,000. Thus, profit is a bit greater than $18,000.
close
79% (02:26) correct 
