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An electrical supplies store sells 140 power stabilizer

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An electrical supplies store sells 140 power stabilizer

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Economist GMAT

An electrical supplies store sells 140 power stabilizers every week. If each power stabilizer costs the store $16, what is the minimum selling price per unit that will ensure a weekly profit of at least $5600 from sales of power stabilizers?

A. 24
B. 26
C. 40
D. 56
E. 60

The OA is D

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AAPL wrote:
Economist GMAT

An electrical supplies store sells 140 power stabilizers every week. If each power stabilizer costs the store $16, what is the minimum selling price per unit that will ensure a weekly profit of at least $5600 from sales of power stabilizers?

A. 24
B. 26
C. 40
D. 56
E. 60

The OA is D
Let x = the selling price per unit
So, x - 16 = the PROFIT on ONE unit
And 140(x - 16) = the PROFIT on the sale of 140 units (aka the weekly profit)

What is the minimum selling price per unit that will ensure a weekly profit of at least $5600 from sales of power stabilizers?
In other words, we want: weekly profit ≥ 5600
Or we can write: 140(x - 16) ≥ 5600
Divide both sides by 140 to get: x - 16 ≥ 40
Add 16 to both sides to get: x ≥ 56

So, the selling price per unit must be $56 or greater

Answer: D

Cheers,
Brent

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GMAT/MBA Expert

Post
AAPL wrote:
Economist GMAT

An electrical supplies store sells 140 power stabilizers every week. If each power stabilizer costs the store $16, what is the minimum selling price per unit that will ensure a weekly profit of at least $5600 from sales of power stabilizers?

A. 24
B. 26
C. 40
D. 56
E. 60
Since at least $5600 in profit must be earned by 140 units, the minimum required markup per unit = 5600/140 = $40.
Thus, the minimum selling price = (cost per unit) + (minimum required markup per unit) = 16+40 = 56.

The correct answer is D.

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Post
AAPL wrote:
Economist GMAT

An electrical supplies store sells 140 power stabilizers every week. If each power stabilizer costs the store $16, what is the minimum selling price per unit that will ensure a weekly profit of at least $5600 from sales of power stabilizers?

A. 24
B. 26
C. 40
D. 56
E. 60

The OA is D
We use the profit formula: revenue - cost = profit. We can create the following inequality in which n = selling price per unit:

140n - 140 x 16 ≥ 5600

140(n - 16) ≥ 5600

n - 16 ≥ 40

n ≥ 56

Alternate Solution:

Since the store sells 140 power stabilizer each week, in order to make a profit of $5600, the store must make a profit of at least 5600/140 = $40 on each power stabilizer. Since the cost of a power stabilizer is $16, the selling price of each power stabilizer must be at least 16 + 40 = $56.

Answer: D

_________________

Scott Woodbury-Stewart
Founder and CEO
scott@targettestprep.com



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

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