Which of company X and company Y earned the greater gross profits last year ?
Statement I  last year the expenses of Company X were 5/6 of the expenses of company Y
Statement II  Last year the revenues of Company X were $6 million less than the revenues of Company Y
I got C as the answer. Is this correct?
Thanks.
Gross profit
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The following cases satisfy both statements.didieravoaka wrote:Which of company X and company Y earned the greater gross profits last year ?
Statement I  last year the expenses of Company X were 5/6 of the expenses of company Y
Statement II  Last year the revenues of Company X were $6 million less than the revenues of Company Y
Case 1:
Revenues for X = $10 million, expenses for X = $5 million, yielding a profit for X of $5 million.
Revenues for Y = $16 million, expenses for Y = $6 million, yielding a profit for Y of $10 million.
In this case, Y earns a greater profit than X.
Case 2:
Revenues for X = $60 million, expenses for X = $50 million, yielding a profit for X of $10 million.
Revenues for Y = $66 million, expenses for Y = $60 million, yielding a profit for Y of $6 million.
In this case, X earns a greater profit than Y.
Since in the first case Y>X, but in the second case X>Y, the two statements combined are INSUFFICIENT.
The correct answer is E.
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Required: Which of X and Y earned greater profitdidieravoaka wrote:Which of company X and company Y earned the greater gross profits last year ?
Statement I  last year the expenses of Company X were 5/6 of the expenses of company Y
Statement II  Last year the revenues of Company X were $6 million less than the revenues of Company Y
I got C as the answer. Is this correct?
Thanks.
Profit = Revenue  Expenses
Statement 1: last year the expenses of Company X were 5/6 of the expenses of company Y
This statements just tells us about about the expenses.
Insufficient
Statement 2: Last year the revenues of Company X were $6 million less than the revenues of Company Y
This statement tells us just about the revenues but nothing about the expenses.
Insufficient
Combining both the statements:
From statement 1  Assume the expenses of company X = 5E,
expenses of company Y = 6E
From statement 2  Assume the revenue of company X = R
Revenues of company Y = R + 6
Profit of X = R  5E
Profit of Y = R + 6  6E
Since we do not know the relation between R and E, we cannot calculate the relation between the profits.
Insufficient
Correct Option: E

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Let's say X's expenses are a and its revenues are b. For Y, let's make those c and d.
S1:: a = (5/6)c
S2:: b = d  6,000,000
The gross profits would be revenues  expenses, so our question is now
Is b  a > d  c ?
Is (d  6,000,000)  (5/6)c > d  c ?
Is (1/6)c > 6,000,000 ?
Is c > 36,000,000 ?
But we don't know the value of c (Company Y's expenses), so we can't answer.
S1:: a = (5/6)c
S2:: b = d  6,000,000
The gross profits would be revenues  expenses, so our question is now
Is b  a > d  c ?
Is (d  6,000,000)  (5/6)c > d  c ?
Is (1/6)c > 6,000,000 ?
Is c > 36,000,000 ?
But we don't know the value of c (Company Y's expenses), so we can't answer.