company's profit

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dikku07: Senior | Next Rank: 100 Posts; Posts: 57; Joined: Fri Jan 02, 2009 8:59 am

by dikku07 » Wed Sep 23, 2009 8:11 am

A construction company was paid a total of $500,000 for a construction project. The company’s only costs for the project were for labor and materials. Was the company’s profit for the project greater than $150,000?

(1) The company’s total cost was three times its cost for materials.

(2) The company’s profit was greater than its cost for labor.

A. Statement (1) ALONE is sufficient, but statement (2) alone is not sufficient.
B. Statement (2) ALONE is sufficient, but statement (1) alone is not sufficient.
C. BOTH statements TOGETHER are sufficient, but NEITHER statement ALONE is sufficient.
D. EACH statement ALONE is sufficient.
E. Statements (1) and (2) TOGETHER are NOT sufficient.

Source: Beat The GMAT — Data Sufficiency | Wed Sep 23, 2009 8:11 am

sreak1089: Master | Next Rank: 500 Posts; Posts: 379; Joined: Wed Jun 03, 2009 3:05 amFollowed by: 1 member; Thanked: 19 times; GMAT Score:690

by sreak1089 » Wed Sep 23, 2009 9:23 am

profit = Revenue - Total Cost
= 500,000 - Total cost

Total cost = cost of material + labor

Question is profit > 150,000 which can be re-phrased
as is Total cost < 350,000?

Statement # 1:
Total cost = (3*cost of material)
Let cost of material = m

3*m = m + labor

cost of material = m, labor cost = 2m

However, this does not tell us what is the value of 'm'. Hence Statement # 1 is NOT SUFFICIENT.

Statement # 2:

Profit > 2m

Statement # 2 is NOT SUFFICIENT.

Combining # 1 and #2:

=> >2m = 500,000 - 3m
=> >5m = 500,000
=> m < 100,000
=>Thus, Total cost = 3m < 300,000
=> Profit > 150,000

Hence its C.

sreak1089: Master | Next Rank: 500 Posts; Posts: 379; Joined: Wed Jun 03, 2009 3:05 amFollowed by: 1 member; Thanked: 19 times; GMAT Score:690

by sreak1089 » Wed Sep 23, 2009 10:57 pm

OA please??

dikku07: Senior | Next Rank: 100 Posts; Posts: 57; Joined: Fri Jan 02, 2009 8:59 am

by dikku07 » Thu Sep 24, 2009 6:22 am

OA is C
Thanks for the explanation.

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