Question

The following line graph shows the sales and cost of goods sold (in rupees) for XYZ Co. over 10 months, from Month 1 to Month 10.

Profit in a given month is sales minus cost of goods sold for that month.

In which month did the company earn the maximum profit?

• A. Month 5
• B. Month 4
• C. Month 3
• D. Month 1

Hint:

Profit for a month is the vertical gap between the sales line and the cost line at that month; find where this gap is widest.

Answer 1

The Correct Option is D

Step 1: Read sales and cost for each month from the graph.
The graph plots two lines, sales and cost of goods sold, for months 1 to 10. Profit for a month is \(\text{Sales} - \text{Cost}\). Reading the two curves off the graph gives approximate values, in rupees, for each month.

Step 2: Work out profit month by month.
Month 1: sales about 2200, cost about 1800, so profit is \(2200 - 1800 = 400\).
Month 2: sales about 1750, cost about 1625, so profit is \(1750 - 1625 = 125\).
Month 3: sales about 1625, cost about 1250, so profit is \(1625 - 1250 = 375\).
Month 4: sales about 2250, cost about 1975, so profit is \(2250 - 1975 = 275\).
Month 5: sales about 1700, cost about 1575, so profit is \(1700 - 1575 = 125\).
Month 6: sales about 1825, cost about 1800, so profit is \(1825 - 1800 = 25\).
Month 7: sales about 2100, cost about 1825, so profit is \(2100 - 1825 = 275\).
Month 8: sales about 1450, cost about 1350, so profit is \(1450 - 1350 = 100\).
Month 9: sales about 1700, cost about 1600, so profit is \(1700 - 1600 = 100\).
Month 10: sales about 1650, cost about 1700, so profit is \(1650 - 1700 = -50\), which is a loss.

Step 3: Compare all nine positive profit figures.
Listing the profits gives 400, 125, 375, 275, 125, 25, 275, 100, 100, and a loss of 50 in month 10. The largest of these is 400, in month 1, and every other month falls well short of it, so there is no close tie to worry about.

Step 4: Check why the other options are wrong.
Month 5 gives a profit of only 125, month 4 gives 275, and month 3 gives 375, all lower than month 1's 400. So options pointing to months 5, 4, or 3 undervalue month 1's lead.

Final Answer:
The company earned its maximum profit in month 1. \[ \boxed{\text{Month 1}} \]