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24 Oct 2019, 01:57
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B
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Difficulty:
35%
(medium)
Question Stats:
72% (02:11) correct
28%
(02:48)
wrong
based on 61
sessions
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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
A. $27,000
B. $30,000
C. $67,500
D. $109,800
E. $135,000
24 Oct 2019, 03:08
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Bunuel
Total expense = Fixed + Variable
Note : variable cost is directly proportional to the number of units produced .
We can create 2 equations here.
Let Fixed cost be F and variable per unit be x .
F + 25000x = 705000
F + 20000x = 570000
.............................................................DEDUCT
5000X = 135000
X = 27.
Plug this in a equation.
F + 20000 * 27 = 570000
F + 540000 = 570000
F = 30000.
In both cases Fixed cost is same. In case of doubt , one can verify another equation.
B is the correct answer.
26 Oct 2019, 09:03
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Bunuel
If F denotes the fixed monthly expenses and x denotes the number of units manufactured, the total monthly expense is given by nx + F, where n is a constant. We can create the following equations:
20,000n + F = 570,000
and
25,000n + F = 705,000
Subtracting the first equation from the second, we have:
5,000n = 135,000
n = 27
Thus:
20,000(27) + F = 570,000
540,000 + F = 570,000
F = 30,000
Answer: B
