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Greg’s Goosebumps produces Halloween items. Greg’s production costs co
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30 May 2017, 10:40
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A
B
C
D
E
Difficulty:
35% (medium)
Question Stats:
68% (01:40) correct 32% (01:59) wrong based on 166 sessions
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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 $200,000?
Re: Greg’s Goosebumps produces Halloween items. Greg’s production costs co
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30 May 2017, 11:11
Let x be the items being produced CP = 4x SP = 20x Profit = 16x Since the fixed cost of 120000 needs be recovered along with making a 200000$ profit, the total profit that needs to be made is 320000$
16x = 320000 x = 20000 items(Option A)
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Greg’s Goosebumps produces Halloween items. Greg’s production costs co
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01 Jun 2017, 08:34
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?
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
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68% (01:40) correct 
