ACME’s manufacturing costs for sets of horseshoes include a $11,450 initial outlay, and $19.75 per set. They can sell

Expert replies

Previous Topic Next Topic

VJesus12: Legendary Member; Posts: 2276; Joined: Sat Oct 14, 2017 6:10 amFollowed by: 3 members

by VJesus12 » Fri May 08, 2020 8:17 am

Timer

00:00

Your answer

Difficulty–

right wrong

Pick an answer to see how members did

ACME’s manufacturing costs for sets of horseshoes include a $11,450 initial outlay, and $19.75 per set. They can sell the sets $52.50. If profit is revenue from sales minus manufacturing costs, and the company produces & sells 987 sets of horseshoes, what was their profit?

(A) $20,874.25
(B) $30,943.25
(C) $41,308.50
(D) $51,817.50
(E) $53,624.25

[spoiler]OA=A[/spoiler]

Source: Magoosh

Source: Beat The GMAT — Problem Solving | Fri May 08, 2020 8:17 am

deloitte247: Legendary Member; Posts: 2214; Joined: Fri Mar 02, 2018 2:22 pmFollowed by: 5 members

Re: ACME’s manufacturing costs for sets of horseshoes include a $11,450 initial outlay, and $19.75 per set. They can sel

by deloitte247 » Sun May 10, 2020 3:11 am

Manufacturing cost for sets of shoes = $11,450
Cost per set = $19.75
Selling price per set = $52.50

Profit = sales - manufacturing cost
Profit per set = $52.50 - $19.75 = $32.75

Given that ACME produces 987set of horseshoes
Profit = $32.75 * 987
= $32,324.25

Since an initial investment of $11,450 was made, the profit made from the horseshoes is now:
Profit = $32,324.25 - $11,450
=$20,874.25

Answer = A

swerve: Legendary Member; Posts: 2604; Joined: Sun Oct 29, 2017 2:04 pmFollowed by: 6 members

Re: ACME’s manufacturing costs for sets of horseshoes include a $11,450 initial outlay, and $19.75 per set. They can sel

by swerve » Sun May 10, 2020 6:16 am

VJesus12 wrote: ↑
Fri May 08, 2020 8:17 am
ACME’s manufacturing costs for sets of horseshoes include a $11,450 initial outlay, and $19.75 per set. They can sell the sets $52.50. If profit is revenue from sales minus manufacturing costs, and the company produces & sells 987 sets of horseshoes, what was their profit?

(A) $20,874.25
(B) $30,943.25
(C) $41,308.50
(D) $51,817.50
(E) $53,624.25

[spoiler]OA=A[/spoiler]

Source: Magoosh

Approximations
$19.75 = 20.00$
$52.50 = 50$
$987 = 1000$
Initial cost $= 20*1000 + 11450 = 31450$
Selling $= 50 * 1000 = 50000$
Profit $= 50000 - 31450 = 19000$
Close to $20$k.

Therefore, A

GMAT/MBA Expert

Brent@GMATPrepNow: GMAT Instructor; Posts: 16206; Joined: Mon Dec 08, 2008 6:26 pmFollowed by: 1268 members; Location: Vancouver, BC; Thanked: 5254 times; GMAT Score:770

Re: ACME’s manufacturing costs for sets of horseshoes include a $11,450 initial outlay, and $19.75 per set. They can sel

by Brent@GMATPrepNow » Sun May 10, 2020 10:00 am

VJesus12 wrote: ↑
Fri May 08, 2020 8:17 am
ACME’s manufacturing costs for sets of horseshoes include a $11,450 initial outlay, and $19.75 per set. They can sell the sets $52.50. If profit is revenue from sales minus manufacturing costs, and the company produces & sells 987 sets of horseshoes, what was their profit?

(A) $20,874.25
(B) $30,943.25
(C) $41,308.50
(D) $51,817.50
(E) $53,624.25

[spoiler]OA=A[/spoiler]

Source: Magoosh

Here's a slight twist:

It COSTS $19.75 per set, and each set is SOLD for $52.50
So, the company makes approximately $33 per set ($52.50 - $19.75 ≈ $33)

The company sold 987 sets.
So, the profit ≈ ($33)(1000) ≈$33,000

Keep in mind, that there's also the initial outlay of $11,450

So, the TOTAL PROFIT ≈$33,000 - $11,450
≈ $21,500

The best (closest) answer is A

Cheers,
Brent

Brent Hanneson - Creator of GMATPrepNow.com

Featured schoolRound 2 closes Jan 7, 2027 54 days left

Chicago Booth

Since 1982, 10 Booth faculty members have received the Nobel Prize in Economic Sciences, more than any other business school.

#3
U.S. News rank: $175,000
Median base salary: 670
Average GMAT Focus: 635
Students in the class

Apply to Booth Visit chicagobooth.edu See the full profile

Photo: Warren LeMay, CC BY-SA 2.0

GMAT Course Reviews

563 reviews

1168 reviews

431 reviews

359 reviews

147 reviews

5/5

5 Star (563 Reviews)

"Target Test Prep is the closest to the official version of the GMAT exam, about 99% accuracy in terms of the quality and quantity of information. The course has excellently created singular sets of focused lessons and tests for every possible topic that one could come across in the official GMAT exam."

"The TTP course maximizes the efficiency of the time you spend studying. It will take time and effort but I could almost guarantee that if you complete the course exactly as it is laid out you will get an amazing score. They also have a very responsive team willing to help with any questions you might have."

"TTP has two things that I think no other test prep company offers: A teaching approach that reinforces understanding and an attitude that will give you the mental preparedness needed to succeed on the test. TTP gives you a deep understanding of the concept you need to know while teaching you how to think."

Write a Review