GMAT Question of the Day - Daily to your Mailbox; hard ones only

It is currently 14 Aug 2018, 01:45

Close

GMAT Club Daily Prep

Thank you for using the timer - this advanced tool can estimate your performance and suggest more practice questions. We have subscribed you to Daily Prep Questions via email.

Customized
for You

we will pick new questions that match your level based on your Timer History

Track
Your Progress

every week, we’ll send you an estimated GMAT score based on your performance

Practice
Pays

we will pick new questions that match your level based on your Timer History

Not interested in getting valuable practice questions and articles delivered to your email? No problem, unsubscribe here.

Close

Request Expert Reply

Confirm Cancel

Each month, a certain manufacturing company's total expenses are equal

  new topic post reply Question banks Downloads My Bookmarks Reviews Important topics  
Author Message
TAGS:

Hide Tags

Math Expert
User avatar
V
Joined: 02 Sep 2009
Posts: 47879
Each month, a certain manufacturing company's total expenses are equal  [#permalink]

Show Tags

New post 12 Jul 2018, 01:32
00:00
A
B
C
D
E

Difficulty:

  35% (medium)

Question Stats:

77% (01:49) correct 23% (02:14) wrong based on 30 sessions

HideShow timer Statistics

Each month, a certain manufacturing company's total expenses are equal to a fixed monthly expense plus a variable expense that is directly proportional to the number of units produced by the company during that month. If the company's total expenses for a month in which it produces 20,000 units are $570,000, and the total expenses for a month in which it produces 25,000 units are $705,000, what is the company's fixed monthly expense?

A. $27,000

B. $30,000

C. $67,500

D. $109,800

E. $135,000

_________________

New to the Math Forum?
Please read this: Ultimate GMAT Quantitative Megathread | All You Need for Quant | PLEASE READ AND FOLLOW: 12 Rules for Posting!!!

Resources:
GMAT Math Book | Triangles | Polygons | Coordinate Geometry | Factorials | Circles | Number Theory | Remainders; 8. Overlapping Sets | PDF of Math Book; 10. Remainders | GMAT Prep Software Analysis | SEVEN SAMURAI OF 2012 (BEST DISCUSSIONS) | Tricky questions from previous years.

Collection of Questions:
PS: 1. Tough and Tricky questions; 2. Hard questions; 3. Hard questions part 2; 4. Standard deviation; 5. Tough Problem Solving Questions With Solutions; 6. Probability and Combinations Questions With Solutions; 7 Tough and tricky exponents and roots questions; 8 12 Easy Pieces (or not?); 9 Bakers' Dozen; 10 Algebra set. ,11 Mixed Questions, 12 Fresh Meat

DS: 1. DS tough questions; 2. DS tough questions part 2; 3. DS tough questions part 3; 4. DS Standard deviation; 5. Inequalities; 6. 700+ GMAT Data Sufficiency Questions With Explanations; 7 Tough and tricky exponents and roots questions; 8 The Discreet Charm of the DS; 9 Devil's Dozen!!!; 10 Number Properties set., 11 New DS set.


What are GMAT Club Tests?
Extra-hard Quant Tests with Brilliant Analytics

examPAL Representative
User avatar
S
Joined: 07 Dec 2017
Posts: 541
Re: Each month, a certain manufacturing company's total expenses are equal  [#permalink]

Show Tags

New post 12 Jul 2018, 01:42
Bunuel wrote:
Each month, a certain manufacturing company's total expenses are equal to a fixed monthly expense plus a variable expense that is directly proportional to the number of units produced by the company during that month. If the company's total expenses for a month in which it produces 20,000 units are $570,000, and the total expenses for a month in which it produces 25,000 units are $705,000, what is the company's fixed monthly expense?

A. $27,000

B. $30,000

C. $67,500

D. $109,800

E. $135,000



We'll break our question into equations to make it easier to understand.
This is a Precise appraoch.

total expense = fixed monthly expense + variable expense --> t = f + ku (where k is a constant - we are told the variable expense in 'proportional to the amount of units)
570,000 = f + 20,000k
705,000 = f + 25,000k

Looking at our equations, it is easy to see that a difference in 5,000 units created another 705,000 - 570,000 = 135,000 dollars of revenue.
So 20,000 units must cost 135,000*4 = 540,000 dollars meaning that, from our first equation, the fixed cost is 570,000 - 540,000 = 30,000

(B) is our answer.
_________________

David
Senior tutor at examPAL
Signup for a free GMAT course
Image
We won some awards:
Image
Save up to $250 on examPAL packages (special for GMAT Club members)

Manager
Manager
User avatar
B
Joined: 13 Feb 2018
Posts: 126
Re: Each month, a certain manufacturing company's total expenses are equal  [#permalink]

Show Tags

New post 12 Jul 2018, 04:27
We can observe that additional 5000 (25000-20000) items lead to $135 000 ($705000-$570000) increase.

So the total variable cost will be:
(20000/5000)*135000=540 000
(25000/5000)*135000=675 000

Fixed cost=Total cost - variable cost
570 000-540 000= 30 000
705 000- 675 000 = 30 000

In My Opinion
Ans: B
SC Moderator
avatar
V
Joined: 22 May 2016
Posts: 1900
Premium Member CAT Tests
Each month, a certain manufacturing company's total expenses are equal  [#permalink]

Show Tags

New post 14 Jul 2018, 13:13
Bunuel wrote:
Each month, a certain manufacturing company's total expenses are equal to a fixed monthly expense plus a variable expense that is directly proportional to the number of units produced by the company during that month. If the company's total expenses for a month in which it produces 20,000 units are $570,000, and the total expenses for a month in which it produces 25,000 units are $705,000, what is the company's fixed monthly expense?

A. $27,000

B. $30,000

C. $67,500

D. $109,800

E. $135,000

The trap is Answer A. $27 is the cost per unit.

That figure is used to calculate variable cost (variable cost total changes because the number of units produced changes)

Variable Cost = (Per unit cost) * (# of units)

Fixed Cost is a cost that does not change that is incurred with each and every production batch irrespective of number of units.

Fixed Cost = (Total Cost - Variable Cost)

(1) Total cost of "extra" units?
How many [relatively] extra units cost how much total?

Fixed cost + 25,000 units = $705,000
Fixed cost + 20,000 units = $570,000

Subtract bottom from top: 5,000 units cost $135,000

(2) Cost per unit:
\(\frac{TotalCost}{No.Of.Units}=\frac{$135,000}{5,000}=$27\) per unit

Per unit cost is $27, but $27 per unit is above and beyond some fixed cost that is the same for every production batch. We need that fixed cost.

(3) Fixed cost
Fixed cost = Total cost - (Variable Cost)

Pick one production batch. Doesn't matter which one.

Variable Cost = (# of units) * (cost per unit = $27)

Variable Cost of 20,000 units:
\(($27 * 20,000) = $540,000\)

Total Cost of 20,000 units:\($570,000\)

Fixed Cost: \(($570,000 - $540,000) = $30,000\)

Answer B
_________________

In the depths of winter, I finally learned
that within me there lay an invincible summer.

-- Albert Camus, "Return to Tipasa"

Senior Manager
Senior Manager
avatar
G
Joined: 31 Oct 2013
Posts: 472
Concentration: Accounting, Finance
GPA: 3.68
WE: Analyst (Accounting)
Re: Each month, a certain manufacturing company's total expenses are equal  [#permalink]

Show Tags

New post 14 Jul 2018, 19:34
Bunuel wrote:
Each month, a certain manufacturing company's total expenses are equal to a fixed monthly expense plus a variable expense that is directly proportional to the number of units produced by the company during that month. If the company's total expenses for a month in which it produces 20,000 units are $570,000, and the total expenses for a month in which it produces 25,000 units are $705,000, what is the company's fixed monthly expense?

A. $27,000

B. $30,000

C. $67,500

D. $109,800

E. $135,000


Note:

Fixed cost will not change regardless the number of units produced.

***** If amount changes , that change must be occurred because of Variable cost.

Workings :

For 20000 units total cost is 570000
for 25000 units total cost is 705000

*** For 5000 units cost is increased by 135000.
This 135000 is your variable cost for 5000 units. Note: Fixed cost remains same in all condition.

Variable cost per unit :

135000 / 5000

= 27 / unit.


We know ,

Total cost = Fc + Vc
570000 = Fc + (20000*27)..........(vc = 27 / unit for 20000 units)

570000 - 540000 = Fc

Fc = 30000.

Thus the best answer is B.
Math Expert
User avatar
V
Joined: 02 Aug 2009
Posts: 6501
Re: Each month, a certain manufacturing company's total expenses are equal  [#permalink]

Show Tags

New post 14 Jul 2018, 20:00
Bunuel wrote:
Each month, a certain manufacturing company's total expenses are equal to a fixed monthly expense plus a variable expense that is directly proportional to the number of units produced by the company during that month. If the company's total expenses for a month in which it produces 20,000 units are $570,000, and the total expenses for a month in which it produces 25,000 units are $705,000, what is the company's fixed monthly expense?

A. $27,000

B. $30,000

C. $67,500

D. $109,800

E. $135,000



Since the expense are inclusive of a certain constant amount and variable expense, so the difference in cost will be the difference in cost of variables only..
So cost of 25000-20000=705000-570000=135000
Cost of 5000=135000, so cost of 5000*4 or 20000=135000*4=540000
If the variable cost of 20000 is 540000, the constant cost will be the remaining that is 570000-540000=30000

B
_________________

1) Absolute modulus : http://gmatclub.com/forum/absolute-modulus-a-better-understanding-210849.html#p1622372
2)Combination of similar and dissimilar things : http://gmatclub.com/forum/topic215915.html
3) effects of arithmetic operations : https://gmatclub.com/forum/effects-of-arithmetic-operations-on-fractions-269413.html


GMAT online Tutor

Re: Each month, a certain manufacturing company's total expenses are equal &nbs [#permalink] 14 Jul 2018, 20:00
Display posts from previous: Sort by

Each month, a certain manufacturing company's total expenses are equal

  new topic post reply Question banks Downloads My Bookmarks Reviews Important topics  

Events & Promotions

PREV
NEXT


GMAT Club MBA Forum Home| About| Terms and Conditions and Privacy Policy| GMAT Club Rules| Contact| Sitemap

Powered by phpBB © phpBB Group | Emoji artwork provided by EmojiOne

Kindly note that the GMAT® test is a registered trademark of the Graduate Management Admission Council®, and this site has neither been reviewed nor endorsed by GMAC®.