Kritesh wrote:
Greg’s Goosebumps produces Halloween items. Greg’s production costs consist of annual fixed costs totaling $120,000 and variable costs averaging $4 per item. If Greg’s selling price per item is $20, how many items must he produce and sell to earn an annual profit of $200,000?
(A) 20,000
(B) 15,000
(C) 3,333
(D) 5,000
(E) 1,333
I couldn't "see" the equation within 20 seconds, though I knew I was close. I decided to test values where x = the number of items to be produced and sold.
Option C looks less than fun.
1. Start with D, where x = 5000
Total cost (TC): $120,000 + ($4)*(5,000) = $140,000
Total revenue (TR): ($20)*(5,000) = $100,000
Gross profit = (TR - TC) = -$40,000 ... So x = 5,000 is much too small.
2. Try A, x = 20,000
TC: $120,000 + ($4)*(20,000) = $200,000
TR: ($20)*(20,000) =$400,000
$400,000 - $200,000 = $200,000 profit. Correct.
Answer A
close
75% (01:18) correct 
