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Register now and save up to $200 Available with Beat the GMAT members only code • 5-Day Free Trial 5-day free, full-access trial TTP Quant Available with Beat the GMAT members only code ## Profit and loss tagged by: Brent@GMATPrepNow This topic has 5 expert replies and 0 member replies vaibhav101 Senior | Next Rank: 100 Posts Joined 01 May 2017 Posted: 32 messages Upvotes: 4 #### Profit and loss Mon Jun 05, 2017 5:04 am The manufacturer of a certain item can sell all he can produce at the selling price of$60 each. It costs him $40 in materials and labour to produce each item and he has overhead expenses of$3000 per week in order to operate the plant. The minimum number of units that he should produce and sell in order to make profit of at least $1000 per week, is A 200 B 250 C 300 D 400 E 500 Need free GMAT or MBA advice from an expert? Register for Beat The GMAT now and post your question in these forums! ### GMAT/MBA Expert Matt@VeritasPrep GMAT Instructor Joined 12 Sep 2012 Posted: 2640 messages Followed by: 113 members Upvotes: 625 Target GMAT Score: V51 GMAT Score: 780 Top Reply Mon Jun 05, 2017 11:39 pm Costs:$40 per item + $3000 Profits:$60 per item

If our guy sells x items and makes $1000, we know that Profits - Costs =$1000

60x - (40x + 3000) = 1000

20x - 3000 = 1000

20x = 4000

x = 200

Thanked by: vaibhav101
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Jeff@TargetTestPrep GMAT Instructor
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Sat Jun 10, 2017 7:41 am
vaibhav101 wrote:
The manufacturer of a certain item can sell all he can produce at the selling price of $60 each. It costs him$40 in materials and labour to produce each item and he has overhead expenses of $3000 per week in order to operate the plant. The minimum number of units that he should produce and sell in order to make profit of at least$1000 per week, is
A 200
B 250
C 300
D 400
E 500
We can let x = the number of items sold.

Thus, the revenue from selling x items is 60x.

The cost of producing x items is 40x and there is a fixed cost of $3,000. Thus, the total cost is 40x + 3000. Since revenue - cost = profit and we want the profit to be at least$1,000, we can now determine the minimum value of x using the following inequality:

60x - (40x + 3,000) â‰¥ 1000

60x - 40x - 3,000 â‰¥ 1000

20x - 3,000 â‰¥ 1000

20x â‰¥ 4000

x â‰¥ 200

### GMAT/MBA Expert

Matt@VeritasPrep GMAT Instructor
Joined
12 Sep 2012
Posted:
2640 messages
Followed by:
113 members
625
Target GMAT Score:
V51
GMAT Score:
780
Mon Jun 05, 2017 11:39 pm
Costs: $40 per item +$3000
Profits: $60 per item If our guy sells x items and makes$1000, we know that

Since revenue - cost = profit and we want the profit to be at least $1,000, we can now determine the minimum value of x using the following inequality: 60x - (40x + 3,000) â‰¥ 1000 60x - 40x - 3,000 â‰¥ 1000 20x - 3,000 â‰¥ 1000 20x â‰¥ 4000 x â‰¥ 200 Answer: A ### GMAT/MBA Expert Jay@ManhattanReview GMAT Instructor Joined 22 Aug 2016 Posted: 902 messages Followed by: 18 members Upvotes: 470 Mon Jun 05, 2017 9:15 pm vaibhav101 wrote: The manufacturer of a certain item can sell all he can produce at the selling price of$60 each. It costs him $40 in materials and labour to produce each item and he has overhead expenses of$3000 per week in order to operate the plant. The minimum number of units that he should produce and sell in order to make profit of at least $1000 per week, is A 200 B 250 C 300 D 400 E 500 We see that at$60 selling price and $40 cost price, there is a margin of$20 per unit. If there are x units to be produced, they must bring in the total margin (20x) that can at least cover overhead expense ($3000) and profit ($1000).

Thus, 20x â‰¥ (3000 + 1000) => 20x â‰¥ 4000 => x â‰¥ 200 units.

Hope this helps!

-Jay
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