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A television manufacturer produces 600. . .

This topic has 3 expert replies and 0 member replies

A television manufacturer produces 600. . .

Post Tue Sep 12, 2017 11:30 am
A television manufacturer produces 600 units of a certain model each month at a cost to the manufacturer of $90 per unit and all of the produced units are sold each month. What is the minimum selling price per unit that will ensure that the monthly profit (revenue from sales minus the manufacturer's cost to produce) on the sales of these units will be at least $42,000?

A) $110
B) $120
C) $140
D) $160
E) $180

The OA is D.

Should I find the cost function? How can I solve this PS question?

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Post Tue Sep 19, 2017 2:59 pm
Vincen wrote:
A television manufacturer produces 600 units of a certain model each month at a cost to the manufacturer of $90 per unit and all of the produced units are sold each month. What is the minimum selling price per unit that will ensure that the monthly profit (revenue from sales minus the manufacturer's cost to produce) on the sales of these units will be at least $42,000?

A) $110
B) $120
C) $140
D) $160
E) $180

The OA is D.
We can let p = the selling price per unit and create the following equation:

600p - 600(90) ≥ 42,000

600p - 54,000 ≥ 42,000

600p ≥ 96,000

p ≥ 160

Since p ≥ 160, we see that the minimum selling price must be $160.

Answer: D

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Jeffrey Miller Head of GMAT Instruction

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Top Reply
Post Wed Sep 13, 2017 9:37 pm
Vincen wrote:
A television manufacturer produces 600 units of a certain model each month at a cost to the manufacturer of $90 per unit and all of the produced units are sold each month. What is the minimum selling price per unit that will ensure that the monthly profit (revenue from sales minus the manufacturer's cost to produce) on the sales of these units will be at least $42,000?

A) $110
B) $120
C) $140
D) $160
E) $180

The OA is D.

Should I find the cost function? How can I solve this PS question?
We are given that

Monthly Profit = Revenue from sales - Cost to produce

Or,

Monthly Profit on 600 units = Revenue from sales of 600 units - Cost of 600 units

42000 = Revenue from sales of 600 units - 600 x 90

=> Revenue from sales of 600 units = 42000 + 54000 = 96000

Revenue from sales of one unit (Selling price per unit) = 96000 / 600 = $160.

The correct answer: D

Hope this helps!

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Post Tue Sep 19, 2017 2:59 pm
Vincen wrote:
A television manufacturer produces 600 units of a certain model each month at a cost to the manufacturer of $90 per unit and all of the produced units are sold each month. What is the minimum selling price per unit that will ensure that the monthly profit (revenue from sales minus the manufacturer's cost to produce) on the sales of these units will be at least $42,000?

A) $110
B) $120
C) $140
D) $160
E) $180

The OA is D.
We can let p = the selling price per unit and create the following equation:

600p - 600(90) ≥ 42,000

600p - 54,000 ≥ 42,000

600p ≥ 96,000

p ≥ 160

Since p ≥ 160, we see that the minimum selling price must be $160.

Answer: D

_________________
Jeffrey Miller Head of GMAT Instruction

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