Total Cost

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heshamelaziry
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Topic: Total Cost
PostMon Nov 16, 2009 11:20 pm
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The total cost of producing item X is equal to the sum of item X's fixed cost and variable cost. If the variable cost of producing X decreased by 5% in January, by what percent did the total cost of producing item X change in January?

(1) The fixed cost of producing item X increased by 13% in January.

(2) Before the changes in January, the fixed cost of producing item X was 5 times the variable cost of producing item X.
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palvarez
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PostMon Nov 16, 2009 11:37 pm
c1 = f 1+v1
c2 = f2+.95v1


(1) f2 = 1.13f1
c2 = 1.13f1+.95v1
c2/c1 = 1 + (.18f1/c1)
Insuff

(2) f1 = 5v1, c1/c2 contains f2, which we don't know. Insufficient.


Combing together is enough.

C is the answer
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manish.sinha
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PostTue Nov 17, 2009 10:58 am
I think IMO = B

Don't think fixed cost is subjected to change. That's why it is fixed.

IMO please..
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Kalvin
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PostWed Nov 18, 2009 7:08 pm
Fixed cost can change. They just typically don't change based on your output.

palvarez's explanation is right on.
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