GMAT Word problem

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abhi75: Master | Next Rank: 500 Posts; Posts: 105; Joined: Tue Oct 16, 2007 5:57 am; Thanked: 3 times

by abhi75 » Sun Jun 22, 2008 6:10 am

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

1) The company's total cost was 3 times its cost for materials.
2) The company's profit was greater than its cost for labor.

I tried to solve it and ended up with either a C or E.

Can someone please explain this.

Thanks.
-A

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Source: Beat The GMAT — Data Sufficiency | Sun Jun 22, 2008 6:10 am

asigheartau: Junior | Next Rank: 30 Posts; Posts: 18; Joined: Sun Jun 22, 2008 11:25 am; Location: NY; Thanked: 1 times

by asigheartau » Sun Jun 22, 2008 11:39 am

I think it's a C

Revenues: 500,000
Costs= Labor+Materials
500,000-(L+M)>150,000?

1. L+M=3M=> L=2M
In this case, 500,000-3M>150,000? Going more in depth, we get -3M>-350,000 so M<116000> L
500,000- M> 2L This statement is also insufficient by itself as we do not know how much money was spent on materials or Labor.

The two statements taken together give:

L=2M so 500,000-3M>2M

500,000>5M => M<100,000 Judging by this, the cost of materials was less than 100k. Consequently, Labor was twice as much as Materials so L<200k
and you can answer the question.

You got me curious. Can you check the OA and let me know, please?

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lvincy: Senior | Next Rank: 100 Posts; Posts: 60; Joined: Thu Jun 12, 2008 5:38 pm; Thanked: 2 times

by lvincy » Sun Jun 22, 2008 12:10 pm

I will go for C.

from 1) L + M = 3M

Eq becomes
500,000 = L + M + P
= L + L/2 + P

from 2) P > L and we also know lesser the Labor charges greater the profit.
Lets assume Profit is just equal to L to get break point.
500,000 = L+L/2 + L = 5/2L
L = 200,000
But P > L
So P > 200,000> 150,000

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abhi75: Master | Next Rank: 500 Posts; Posts: 105; Joined: Tue Oct 16, 2007 5:57 am; Thanked: 3 times

by abhi75 » Sun Jun 22, 2008 1:24 pm

The OA is indeed C. THanks for the explanation.

-A

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