GMAT Practice Question: Company C produces toy trucks at a cost of 5.00USD each for the first 100 trucks and 3.50USD for...
Question
Company C produces toy trucks at a cost of 5.00USD each for the first 100 trucks and 3.50USD for each additional truck. If 500 toy trucks were produced by Company C and sold for 10.00USD each, what was Company C's gross profit?
- 2,250USD
- 2,500USD
- 3,100USD
- 3,250USD
- 3,500USD
Topics: word problems, profit/loss, revenue/cost, translations
Solution
Step 1
We use the standard profit formula to relate profit, revenue, and cost.
\text{Profit} = \text{Revenue} - \text{Cost}
Step 2
We calculate total revenue by multiplying the selling price by the quantity sold.
\text{Revenue} = 10.00 \times 500 = 5000.00
Step 3
We calculate total cost by summing the cost for the first 100 trucks at 5.00USD each and the additional 400 trucks at 3.50USD each.
100 \times 5.00 = 500.00 400 \times 3.50 = 1400.00 500.00 + 1400.00 = 1900.00
Step 4
We subtract total cost from total revenue to find gross profit.
\text{Profit} = 5000.00 - 1900.00 = 3100.00
Answer
Company C's gross profit was 3100USD, corresponding to option C.
