Calculating profit

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GMAT Quantitative › Calculating profit

Questions 1 - 10

Company B produces toy trucks for a shopping mall at a cost of \$7.00 each for the first 500 trucks and \$5.00 for each additional truck. If 600 trucks were produced by Company B and sold for \$15.00 each, what was Company B’s gross profit?

$\$5000$

$\$0$

$\$9000$

$\$4000$

$\$14,000$

Explanation

First of all, we need to know that

$Gross\ Profit=Revenue-Total\ Cost$ .

There are 600 trucks produced. According to the question, the first 500 trucks cost \$7.00 each. Therefore, the total cost of the first 500 trucks is $\$7.00\cdot 500=\$3500$ .

The other 100 trucks cost \$5.00 each for a cost of $$5.00\cdot 100=$500$ .

Add these together to find the cost of the 600 trucks: $$3500+$500=\$4000$

The total profit is easier to calculate since the selling price doesn't change: $\$15.00\cdot 600=\$9000$

At this point we have both revenue and total cost, so the answer for gross profit is $\$9000-$4000=$5000$ .

Find the number of units, , that a company must sell to break even if the profit equation is .

Explanation

Break even profit is . Plug this value into the equation to solve for the number of units:

$x=\frac{10,000}{500}$

The stock we just bought soared percent, in other words our position increased by $\$110,000$ . How much did we initially invest?

$\$200,000$

$\$125,000$

$\$250,000$

$\$310,000$

$\$256,000$

Explanation

A 55% increased of the unkown value resulting as a increase can be written as follow .

$X=\frac{110,000}{0.55}=\frac{110,000 \cdot 100}{55}$

, which is the initial value.

It costs a company an average of $\$1549$ to build one of their custom woodchippers. The company makes an average profit of of the cost of building a machine. To the nearest dollar, what is the average net profit the company makes per unit sold?

$\$542$

$\$2091$

$\$543$

$\$2092$

Explanation

The company makes an average net profit that is of the cost of building a machine. To calculate the average net profit in this case, simply do the following:

So, to the nearest dollar, the company's net profit is $\$\$542$ .

Note: avoid the trap answer $\$543$ . Our unrounded answer is $\$542.12$ , so we need to round down to $\$\$542$ instead of rounding up to $\$543$ .

Adam buys 12 broken cell phones for \$50 each. If he fixes the cell phones and sells them each for \$80, what is his total profit?

\$360

\$960

\$600

\$260

\$800

Explanation

Adam first buys 12 cell phones for \$50 each, which means he spends:

12(\$50) = \$600

He then sells the phones for \$80 each, which means he earns:

12($80) = $960

The profit is the earnings minus the expenses, so Adam's profit is:

$960 - $600 = \$360

Mary works at a clothing store. She makes \$13/hour and works 40 hours a week. Working at the clothing store gives her a 25% discount on anything they sell. If she buys a sweater that retails for \$50 and a jacket that retails for \$144, what is her net profit for the week?

$\$374.50$

$\$520$

$\$326$

$\$400$

$\$390.50$

Explanation

Mary makes \$13/hour and works 40 hours. So she makes

$\$13\cdot 40\ hours=\$520$ .

However, we need to subtract the cost of the items that she bought. If the sweater retails for \$50, Mary buys it for $.75\cdot \50=\$37.50$ because of her 25% discount. Similarly, she buys the jacket for $.75\cdot 144=\$108$ . So her net profit is

$520-37.50-108=\$374.50$ .

Read the problem below:

The German Club wants to make and sell cookies in order to raise \$500 for a field trip. The equipment they want to use costs \$400 to rent and to operate, and the ingredients for the cookies cost 45 cents per cookie. The German Club wants to sell the cookies for \$2.25 each. At this price, how many cookies will they need to sell in order to earn back the money they paid for the ingredients and the equipment rental and make a profit of \$500?

If is the number of cookies sold, then which of the following equations represents the revenue function?

$R(x) = 0.45\left (x + 400 \right )$

Explanation

The money raised from each cookie sold will be \$2.25, so this is to be multilplied by number of cookies to obtain the revenue in terms of . Therefore, the revenue function is .

A non-profit organization is selling shirts to raise money. They purchase 500 shirts at a cost of \$5 per shirt. During the course of the month, they are only able to sell 388 shirts. They donate the extra shirts. If the shirts sell for \$13 each, how much does the organization earn/lose during this campaign?

\$2,544

\$3,104

\$4,000

\$2,328

\$3,594

Explanation

To calculate profit, we find the total revenue and subtract the total expense.

The total revenue is the amount of money made from selling 388 shirts: $388\ shirts \times $13=$5,044$

The total expense is the amount of money spent on buying 500 shirts: $500\ shirts \times $5=$2,500$

$profit=$5,044-$2,500=\$2,544$

Last year, a car dealer purchased four cars for \$5,000 each, and then later in the year he bought eight more cars for \$7,000 each. If this year the car dealer sells the 12 cars for a combined total of \$126,000, what is his net profit?

$\$50,000$

$\$70,000$

$\$16,000$

$\$100,000$

$\$76,000$

Explanation

Calculate the net profit by subtracting the cost of the cars from the gross profit:

$\textup{net profit}=$126,000-($5,000\times 4)-(\$7,000\times 8)$

$\textup{net profit}=\$126,000-$20,000-$56,000$

$\textup{net profit}=\$50,000$

Read the problem below:

The French Club wants to make and sell cookies in order to raise \$500 for a field trip. The equipment they want to use costs \$400 to rent and to operate, and the ingredients for the cookies cost 45 cents per cookie. The French Club wants to sell the cookies for \$2 each. At this price, how many cookies will they need to sell in order to earn back the money they paid for the ingredients and the equipment rental and make a profit of \$500?

If is the number of cookies sold, then which of the following equations represents the cost function?