Tough and Tricky questions: Word Problems.
AK Car Company wants to manufacture a new car known as Model X, and it is trying to determine how many cars it needs to sell in order to make an annual profit of $30,500,000. The annual fixed costs for Model X total $50,200,000. In addition, each Model X car has an average cost of $5,000 per vehicle to manufacture. If the Company forecasts it will sell 20,000 Model X cars this year, at what price must the Company sell the car to achieve the desired annual profit? Choose the correct choice from the following answers:
A) $4,035
B) $4,036
C) $9,035
D) $16,140
E) $36,140
The AK company plans to make a profit of $30,500,000 and it needs to earn the fixed costs of $50,200,000, so it needs to earn $80,700,000 on top of the costs for the production of the 20,000 cars.   Therefore, price of each car needs to be the unit costs plus $80,700,000/20,000. After removing the 0's, we end with the unit costs plus $8,070/2, which is $5,000 plus $4,035. Therefore, Answer $9,035 is correct.
<result>C</result>
Tough and Tricky questions: Word Problems.
AK Car Company wants to manufacture a new car known as Model X, and it is trying to determine how many cars it needs to sell in order to make an annual profit of $30,500,000. The annual fixed costs for Model X total $50,200,000. In addition, each Model X car has an average cost of $5,000 per vehicle to manufacture. If the Company forecasts it will sell 20,000 Model X cars this year, at what price must the Company sell the car to achieve the desired annual profit?