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Production

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by umaa » Mon Jan 12, 2009 7:58 am
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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Source: — Data Sufficiency |

by subha_sri8 » Mon Jan 12, 2009 10:20 am
Is the answer C?
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by amitabhprasad » Mon Jan 12, 2009 10:36 am
Since it asked for %age change,I think "b" should be sufficient.
T = F+V
stmt2: F = 5V
==> T = 6V original
==> if Variable reduced by 0.95%, thus new variable = 0.95V
T2 = 5V+0.95V
form above we can compute %age change
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Production

by ifairo » Mon Jan 12, 2009 10:44 am
In this case, aren't we assuming that the fixed cost has not changed? What if the fixed cost has changed?
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by amitabhprasad » Mon Jan 12, 2009 10:48 am
I thought of that as well, but question stem doesn't mention any thing regarding change in fixed cost, thats why I treated stmt 1 as additional information but not necessary to answer the question asked.

No sure if this assumption holds true .Let's see what OA
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