Data Sufficiency

Firm XYZ incurs fixed overhead costs of $216,000 every year. What price should it charge to break even for the year, if it can sell all of its output?

(1) For every 100 units the company produces, it adds an additional $250 in production costs.

(2) The firm must produce 500 units every month

Please find the explanation in the picture attached

GMATinsight wrote:Please find the explanation in the picture attached

Total cost = manufacturing cost+variable cost --> is this something we need to be already aware of? I hope GMAT question would state that explicitly.

If I look at the question as it is presented,
I believe B is the right answer.
Firm XYZ is producing 6000 units per year at $216000
Which means break even price = 216000/6000 = 36

Any ideas?

If you look at the language of the question that mentioned "Fixed over head cost " and then the information of first statement that talks of "Variable cost" then I feel it only directs us to take both of them into account. Therefore my option still remains C.

However, Other may give their opinion.

Hi Rich,


The source of this question is Grockit. Even I was confused about the wording of the sentence, that was the primary reason which me to post the questions in this forum.



Cheers