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

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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

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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.

Answer: A

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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

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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
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