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

##### This topic has expert replies
Moderator
Posts: 5929
Joined: 07 Sep 2017
Followed by:19 members

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

by BTGmoderatorDC » Fri Jul 17, 2020 9:38 pm

00:00

A

B

C

D

E

## Global Stats

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

OA A

Source: Magoosh

### GMAT/MBA Expert

GMAT Instructor
Posts: 6362
Joined: 25 Apr 2015
Location: Los Angeles, CA
Thanked: 43 times
Followed by:25 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 [email protected] » Thu Jul 15, 2021 9:41 am
BTGmoderatorDC wrote:
Fri Jul 17, 2020 9:38 pm
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

OA A

Solution:

The revenue from selling 987 sets of horseshoes is (987 x 52.5) dollars, and the cost of producing the same number of sets of horseshoes is (987 x 19.75 + 11,450) dollars. Therefore, the profit is:

(987 x 52.5) - (987 x 19.75 + 11,450) = 987 x (52.5 - 19.75) - 11,450

From here on, we will just approximate the above as:

1000 x 32 - 11,500

32,000 - 11,500

20,500

We see that choice A is closest to this estimate. Therefore, choice A is the correct answer.

Scott Woodbury-Stewart
Founder and CEO
[email protected]

See why Target Test Prep is rated 5 out of 5 stars on BEAT the GMAT. Read our reviews

Legendary Member
Posts: 2031
Joined: 29 Oct 2017
Followed 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 » Fri Jul 16, 2021 9:20 am
BTGmoderatorDC wrote:
Fri Jul 17, 2020 9:38 pm
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

OA A

Source: Magoosh
Approximations
$$19.75 = 20.00$$
$$52.50 = 50$$
$$987 = 1000$$

Initial cost $$= 20\cdot 1000 + 11450 = 31450$$
Selling $$= 50 \cdot 1000 = 50000$$
Profit $$= 50000 - 31450 = 19000$$

Close to $$20k$$

Therefore, A

### GMAT/MBA Expert

GMAT Instructor
Posts: 15751
Joined: 08 Dec 2008
Location: Vancouver, BC
Thanked: 5254 times
Followed by:1266 members
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 [email protected] » Sat Jul 17, 2021 5:14 am
BTGmoderatorDC wrote:
Fri Jul 17, 2020 9:38 pm
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

OA A

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

• Page 1 of 1