## equation

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### equation

by klaud » Thu Mar 08, 2012 6:47 am
A small business invests $9,900 in equipment to produce a product. Each unit of the product costs$0.65 to produce and is sold for $1.20. How many units of the product must be sold before the revenue received equals the total expense of production, including the initial investment in equipment? A. 12,000 B. 14,500 C. 15,230 D. 18,000 E. 20,000 ### GMAT/MBA Expert GMAT Instructor Posts: 16207 Joined: Mon Dec 08, 2008 6:26 pm Location: Vancouver, BC Thanked: 5254 times Followed by:1268 members GMAT Score:770 by Brent@GMATPrepNow » Thu Mar 08, 2012 7:41 am klaud wrote:A small business invests$9,900 in equipment to produce a product. Each unit of the product costs $0.65 to produce and is sold for$1.20. How many units of the product must be sold before the revenue received equals the total expense of production, including the initial investment in equipment?

A. 12,000
B. 14,500
C. 15,230
D. 18,000
E. 20,000
Let's begin by writing a "word equation"
We want: revenue received = total expense of production

Let x = the number of units produced and sold.

Total expenses = initial investment + \$0.65 per unit
= 9900 + 0.65x

So, we get the equation: 1.2x = 9900 + 0.65x

When we solve this for x, we get x=18000

Cheers,
Brent
Brent Hanneson - Creator of GMATPrepNow.com

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by klaud » Thu Mar 08, 2012 8:30 am
I solved this problem in this way:

1,20-0,65= 0,55

the difference between cost and revenue of each product MUST cover the fixed costs.

9,900:0,55=18,000
Last edited by klaud on Thu Mar 08, 2012 8:40 am, edited 2 times in total.

### GMAT/MBA Expert

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by Brent@GMATPrepNow » Thu Mar 08, 2012 8:34 am
klaud wrote:I solved this problem in this way:

1,20-0,65= 0,55
9,900:0,55=18,000
I think our solutions are identical, except I may have explained a few more pieces

Cheers,
Brent
Brent Hanneson - Creator of GMATPrepNow.com

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