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

Instead of computing every month's profit from scratch, look directly at the vertical gap between the sales line and the cost line on the graph, since that gap is exactly the profit for that month.

1. Month 1: the sales line sits at about 2200 while the cost line sits at about 1800, a gap of $400$. This is the widest gap on the entire graph.
2. Month 3: sales is near 1625 and cost near 1250, a gap of $375$, the second widest, but still less than month 1.
3. Month 4: sales near 2250 and cost near 1975 gives a gap of only $275$.
4. Month 5: sales near 1700 and cost near 1575 gives a gap of just $125$, the smallest of the four listed months.

Scanning across all ten months, no other gap comes close to month 1's $400$. Months 6 and 10 are especially narrow, with month 10 even dipping into a loss since the cost line rises above the sales line there.

Let's summarize:

• Profit each month equals the vertical distance between the sales curve and the cost curve.
• The widest such gap on the graph occurs in month 1, at about $400$.

So the maximum profit was earned in month 1.