The total cost of producing item X is equal to the sum of item X's overhead cost and production cost. If the production cost of producing X decreased by 5% in January, by what percent did the total cost of producing item X change in that same month?
(1) The overhead cost of producing item X increased by 13% in January.
(2) Before the changes in January, the overhead cost of producing item X was 5 times the production cost of producing item X.
To determine the percent change in the total cost, we need to know the RATIO between the new cost and the original cost.
Question rephrased: What is the value of (new cost)/(original cost)?
Statement 1: The overhead cost of producing item X increased by 13% in January.
Test one case that also satisfies statement 2 and one case that DOESN'T also satisfy statement 2.
Case 1:
Original overhead cost = 100, original production cost = 20, original total cost = 100+20 = 120.
13% higher overhead cost = 113, 5% lower production cost = 19, new total cost = 113+19 = 132.
Resulting ratio:
(new cost)/(original cost) = 132/120 = 11/10.
Case 2:
Original overhead cost = 100, original production cost = 40, original total cost = 100+40 = 140.
13% higher overhead cost = 113, 5% lower production cost = 38, new total cost = 113+38 = 151.
Resulting ratio:
(new cost)/(original cost) = 151/140.
Since different ratios are possible, INSUFFICIENT.
Statement 2: Before the changes in January, the overhead cost of producing item X was 5 times the production cost of producing item X.
No information about how the overhead cost changes in January.
INSUFFICIENT.
Statements combined:
Case 1 satisfies both statements.
Test one more case that satisfies both statements.
Case 3:
Original overhead cost = 200, original production cost = 40, original total cost = 200+40 = 240.
13% higher overhead cost = 226, 5% lower production cost = 38, new total cost = 226+38 = 264.
Resulting ratio:
(new cost)/(original cost) = 264/240 = 11/10.
Since Case 1 and Case 3 yield the same ratio, the two statements combined indicate that (new cost)/(original cost) = 11/10.
SUFFICIENT.
The correct answer is
C.
Last edited by
GMATGuruNY on Fri Mar 04, 2016 3:50 pm, edited 1 time in total.
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