In 2010, a certain company started the manufacture of product P. The company sold all the units of P manufactured by it in 2010 in that year itself at $7.50 per unit. the total expenses of the company for manufacturing P in 2010 was equal to $150,000 plus 4 percent of its total revenue in selling units of P in 2010. Did the company sell more than 20,830 units of P in 2010?
I. the company did not make a loss on P in 2010.
II. the company did not make a profit on P in 2010.
Please provide a detailed solution for this problem
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The problem below is virtually the same as the following problem in the OG13:
https://www.beatthegmat.com/need-to-unde ... 65811.html
Since each unit is sold for $7.50, total revenue = 7.5x.
Total expenses = 150,000 + 4% of total revenue = 150,000 + (0.04)(7.5x).
To make a profit, total revenue must exceed total expenses:
7.5x > 150,000 + (0.04)(7.5x)
7.5x > 150,000 + 0.3x
7.2x > 150,000
x > 20,833.33.
Since the number of units sold must be an INTEGER VALUE, the resulting inequality implies the following:
If x≥20,834, the company makes a profit.
If x≤20,833, the company suffers a loss.
Statement 1:
Since the company did not suffer a loss, x≥20,834.
Thus, more than 20,830 units were sold.
SUFFICIENT.
Statement 2:
Since the company did not make a profit, x≤20,833.
If x=20,833, then more than 20,830 units were sold.
If x=20,000, then fewer than 20,830 units were sold.
INSUFFICIENT.
The correct answer is A,
https://www.beatthegmat.com/need-to-unde ... 65811.html
Let x = the number of units sold.Architj wrote:In 2010, a certain company started the manufacture of product P. The company sold all the units of P manufactured by it in 2010 in that year itself at $7.50 per unit. the total expenses of the company for manufacturing P in 2010 was equal to $150,000 plus 4 percent of its total revenue in selling units of P in 2010. Did the company sell more than 20,830 units of P in 2010?
I. the company did not make a loss on P in 2010.
II. the company did not make a profit on P in 2010.
Since each unit is sold for $7.50, total revenue = 7.5x.
Total expenses = 150,000 + 4% of total revenue = 150,000 + (0.04)(7.5x).
To make a profit, total revenue must exceed total expenses:
7.5x > 150,000 + (0.04)(7.5x)
7.5x > 150,000 + 0.3x
7.2x > 150,000
x > 20,833.33.
Since the number of units sold must be an INTEGER VALUE, the resulting inequality implies the following:
If x≥20,834, the company makes a profit.
If x≤20,833, the company suffers a loss.
Statement 1:
Since the company did not suffer a loss, x≥20,834.
Thus, more than 20,830 units were sold.
SUFFICIENT.
Statement 2:
Since the company did not make a profit, x≤20,833.
If x=20,833, then more than 20,830 units were sold.
If x=20,000, then fewer than 20,830 units were sold.
INSUFFICIENT.
The correct answer is A,
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Followed here and elsewhere by over 1900 test-takers.
I have worked with students based in the US, Australia, Taiwan, China, Tajikistan, Kuwait, Saudi Arabia -- a long list of countries.
My students have been admitted to HBS, CBS, Tuck, Yale, Stern, Fuqua -- a long list of top programs.
As a tutor, I don't simply teach you how I would approach problems.
I unlock the best way for YOU to solve problems.
For more information, please email me (Mitch Hunt) at [email protected].
Student Review #1
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Hi GMATGuruNY,
To me, this question was pretty wordy and involved lot of calculations. It took me hell lot of time and I ended up doing a careless mistake too :roll: Would you pls. suggest the level of the Qns of this sort?
To me, this question was pretty wordy and involved lot of calculations. It took me hell lot of time and I ended up doing a careless mistake too :roll: Would you pls. suggest the level of the Qns of this sort?