csandeepreddy wrote:At the beginning of last year, a car dealership had 150 cars in stock, which the dealership had purchased for $20,000 each. During the same year, the dealership made only one purchase of cars. What is the total amount spent by the dealership on the cars it had in stock at the end of last year?

1) Last year the dealership purchased 50 cars for $18,000 each.
2) Last year the total revenue from the sale of cars was $180,000.

Question stem: 150 cars @ $20000 each
only 1 purchase of cars was made last year.
The way I interpreted this is 150 cars in stock means these could be bought over number of years and were not sold.
Therefore we need to find how many cars after the purchase we actually sold.

Statement I
50 cars @ $18000 each. cost = $18000*50
We dont know how many cars are sold during last year.
Insufficient.

Statement II
Total revenue = 180,000
We dont how many cars were purchased last year. Insufficient.

Combining I & II
total cost = 150*20000 + 18000*50 = 30,00,000 + 9,00,000 = 39,00,000
revenue = 180,000

Since we dont know how many cars were actually sold at what price, we cannot find the no. of unsold cars or cars currently left in stock to calculate the total cost. Insufficient.

Hence E.

Whats the OA?

Thanks parallel_chase.....

The OA is E

Also, revenue = sale price + profit

Even if they had given us information about how many cars were sold at what price, the answer would be E.

Let me know if that reasoning is flawed.

But isn't there a contradiction - first they say that the dealership bought only one car and then in (1) that it purchased 50? This is really confusing? Thanks

The answer is E.

europe wrote:But isn't there a contradiction - first they say that the dealership bought only one car and then in (1) that it purchased 50? This is really confusing? Thanks

The stem said they made only one purchase of cars, meaning they bought more than one car at once.

Thanks for the fast response. I realized this just now, when I read again the main part of the problem.