Q. A local farmer grows wheat on land he rents for a fixed cost of 200000$ per year. The variable cost of growing one bushel of wheat is 10$. In a certain year, the farmer grows and sells 50000 bushels of wheat and makes a profit of 150000$, after paying fixed cost to rent. If every bushel sold for the same price, what was the selling price in dollars of a bushel of wheat?
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17
Can someone please explain this question to me ? The [spoiler]OA = E[/spoiler]
This is what I am trying to do -
SP = CP + P = ( 200K + 500 K) + ( 150 K + 200 K)
So, basically my question is that do we add 200 K in the Profit or not ? After knowing the answer, I know we don't , but I don't understand why.
My understanding was that as the person is making a profit of 150000$ after paying fixed cost to rent which is 200K, so the total profit he earned should be ( 200 K + 150 K ). Please explain this to me. Thank You.
P.S. Source of this question is from Kaplan GMAT Premier
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SP = CP + Profit
50,000*x(Total SP of Bushel) = 200,000(Fixed Cost) + 50,000*10(Total CP of Bushel) + 150,000(Profit).
Solving we get x = 17.
Answer E.
50,000*x(Total SP of Bushel) = 200,000(Fixed Cost) + 50,000*10(Total CP of Bushel) + 150,000(Profit).
Solving we get x = 17.
Answer E.
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ALWAYS LOOK AT THE ANSWER CHOICES.Param800 wrote:Q. A local farmer grows wheat on land he rents for a fixed cost of 200000$ per year. The variable cost of growing one bushel of wheat is 10$. In a certain year, the farmer grows and sells 50000 bushels of wheat and makes a profit of 150000$, after paying fixed cost to rent. If every bushel sold for the same price, what was the selling price in dollars of a bushel of wheat?
3
7
11
13
17
Can someone please explain this question to me ? The [spoiler]OA = E[/spoiler]
Profit for bushel = (total profit)/(total bushels sold) = 150,000/50,000 = $3.
If the only expense were the variable cost per bushel -- $10 -- the selling price would be $13.
But the land adds $200,000 to the total cost.
Thus, the selling price of each bushel must be GREATER than $13.
The correct answer is E.
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Followed here and elsewhere by over 1900 test-takers.
I have worked with students based in the US, Australia, Taiwan, China, Tajikistan, Kuwait, Saudi Arabia -- a long list of countries.
My students have been admitted to HBS, CBS, Tuck, Yale, Stern, Fuqua -- a long list of top programs.
As a tutor, I don't simply teach you how I would approach problems.
I unlock the best way for YOU to solve problems.
For more information, please email me (Mitch Hunt) at [email protected].
Student Review #1
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