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Each month, a certain manufacturing company's total expenses

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Each month, a certain manufacturing company's total expenses [#permalink] New post 26 Nov 2017, 07:12
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Question Stats:

60% (02:13) correct 40% (00:00) wrong based on 5 sessions
Each month, a certain manufacturing company's total expenses are equal to a fixed monthly expense plus a variable expense that is directly proportional to the number of units produced by the company during that month. If the company's total expenses for a month in which it produces 20,000 units are $570,000, and the total expenses for a month in which it produces 25,000 units are $705,000, what is the company's fixed monthly expense?

A. $27,000

B. $30,000

C. $67,500

D. $109,800

E. $135,000
[Reveal] Spoiler: OA

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Moderator
Moderator
User avatar
Joined: 18 Apr 2015
Posts: 4876
Followers: 74

Kudos [?]: 972 [0], given: 4479

CAT Tests
Re: Each month, a certain manufacturing company's total expenses [#permalink] New post 26 Nov 2017, 07:14
Expert's post
Explanation

CF + CV(20,000) = 570,000
CF + CV(25,000) = 705,000
TE(25,000) - TE(20,000) = 135,000

Since variable expense is proportional to the number of units produced, then for one unit \(\frac{135,000}{5,000}=27\)

CV(20,000) = 20,000*27 = 540,000

TE = 30,000

The answer is B.
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Re: Each month, a certain manufacturing company's total expenses   [#permalink] 26 Nov 2017, 07:14
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Each month, a certain manufacturing company's total expenses

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