In a company of only 20 employees, 10 employees make $80,000

Question

In a company of only 20 employees, 10 employees make $80,000/yr, 6 employees make $150,000/yr, and the 4 highest-paid employees all make the same amount. If the average annual salary for the 20 employees is $175,000/yr, then what is the annual salary of each highest-paid employee?
(A) $250,000
(B) $300,000
(C) $350,000
(D) $400,000
(E) $450,000

This question concerns Weighted Averages. For a set of practice problems and a discussion of strategies on this topic, as well as the OA & OE for this particular problem, see:
https://magoosh.com/gmat/2015/gmat-math ... -averages/

Mike

Magoosh GMAT Instructor
https://gmat.magoosh.com/

towerSpider · Answer

Mike@Magoosh wrote:In a company of only 20 employees, 10 employees make $80,000/yr, 6 employees make $150,000/yr, and the 4 highest-paid employees all make the same amount. If the average annual salary for the 20 employees is $175,000/yr, then what is the annual salary of each highest-paid employee?
(A) $250,000
(B) $300,000
(C) $350,000
(D) $400,000
(E) $450,000

An alternate approach is to work with the TOTALS.
To make the math easier, drop the last three 0's from each value.

Total for all 20 employees = (number)(average) = (20*175) = 3500.
Total for the first 10 employees = (number)(average) = 10*80 = 800.
Total for the next 6 employees = (number)(average) = 6*150 = 900.
Subtracting the totals in red from the total for all 20 employees, we get:
Total for the last 4 employees = 3500-800-900 = 1800.
Thus:
Average for the last 4 employees = (total)/(number) = 1800/4 = 450.

The correct answer is E.

Brent@GMATPrepNow · Answer

Mike@Magoosh wrote:In a company of only 20 employees, 10 employees make $80,000/yr, 6 employees make $150,000/yr, and the 4 highest-paid employees all make the same amount. If the average annual salary for the 20 employees is $175,000/yr, then what is the annual salary of each highest-paid employee?
(A) $250,000
(B) $300,000
(C) $350,000
(D) $400,000
(E) $450,000

Weighted average of groups combined = (group A proportion)(group A average) + (group B proportion)(group B average) + (group C proportion)(group C average) + etc

NOTE: To make things easier, let's drop the thousands and write $80 instead of $80,000
Let x = the annual salary of each highest-paid employee
Plug values into the formula to get: 175 = (10/20)(80) + (6/20)(150) + (4/10)(x)
Simplify: 175 = 40 + 45 + x/5
Simplify: 90 = x/5
Solve: x = 450

So, the annual salary of each highest-paid employee is [spoiler]$450,000[/spoiler]
Answer: E

-----------------------------------------------

For more information on weighted averages, you can watch this free GMAT Prep Now video: https://www.gmatprepnow.com/module/gmat- ... ics?id=805

Here are some additional practice questions related to weighted averages:
- https://www.beatthegmat.com/weighted-ave ... 17237.html
- https://www.beatthegmat.com/weighted-ave ... 14506.html
- https://www.beatthegmat.com/average-weig ... 57853.html
- https://www.beatthegmat.com/averages-que ... 87118.html

Cheers,
Brent

Brent Hanneson - Creator of GMATPrepNow.com

GMATGuruNY · Answer

Mike@Magoosh wrote:In a company of only 20 employees, 10 employees make $80,000/yr, 6 employees make $150,000/yr, and the 4 highest-paid employees all make the same amount. If the average annual salary for the 20 employees is $175,000/yr, then what is the annual salary of each highest-paid employee?
(A) $250,000
(B) $300,000
(C) $350,000
(D) $400,000
(E) $450,000

Weighted average of groups combined = (group A proportion)(group A average) + (group B proportion)(group B average) + (group C proportion)(group C average) + etc

NOTE: To make things easier, let's drop the thousands and write $80 instead of $80,000
Let x = the annual salary of each highest-paid employee
Plug values into the formula to get: 175 = (10/20)(80) + (6/20)(150) + (4/10)(x)
Simplify: 175 = 40 + 45 + x/5
Simplify: 90 = x/5
Solve: x = 450

So, the annual salary of each highest-paid employee is [spoiler]$450,000[/spoiler]
Answer: E

-----------------------------------------------

For more information on weighted averages, you can watch this free GMAT Prep Now video: https://www.gmatprepnow.com/module/gmat- ... ics?id=805

Here are some additional practice questions related to weighted averages:
- https://www.beatthegmat.com/weighted-ave ... 17237.html
- https://www.beatthegmat.com/weighted-ave ... 14506.html
- https://www.beatthegmat.com/average-weig ... 57853.html
- https://www.beatthegmat.com/averages-que ... 87118.html

Cheers,
Brent

Amrabdelnaby · Answer

Hi Mike,

Just wanted to check, what is the level of this question?

Thanks

Mike@Magoosh wrote:In a company of only 20 employees, 10 employees make $80,000/yr, 6 employees make $150,000/yr, and the 4 highest-paid employees all make the same amount. If the average annual salary for the 20 employees is $175,000/yr, then what is the annual salary of each highest-paid employee?
(A) $250,000
(B) $300,000
(C) $350,000
(D) $400,000
(E) $450,000

This question concerns Weighted Averages. For a set of practice problems and a discussion of strategies on this topic, as well as the OA & OE for this particular problem, see:
https://magoosh.com/gmat/2015/gmat-math ... -averages/

Mike

Mike@Magoosh · Answer

Amrabdelnaby wrote:Hi Mike,

Just wanted to check, what is the level of this question?

Thanks

Dear Amrabdelnaby,
I'm happy to respond.

This question is a somewhat easier question, certainly not a member of that mythological and highly suspicious category called "700+ questions."

My friend, I am going to caution you. Questions about the "level" of various GMAT practice questions will not necessarily help you, nor are these levels particularly well-defined. See this blog:
https://magoosh.com/gmat/2014/is-this-a- ... -question/

I would recommend learning as much as you can from each question, especially those you get wrong the first time. It is the mark of a truly excellent student never to make the same mistake twice.

Does all this make sense?
Mike

Magoosh GMAT Instructor
https://gmat.magoosh.com/

peter456 · Answer

Just an observation:

For the 10 & 6 member employees, the figures given should indicate "average"

For example, 10 employees make an average salary of $80,000/yr, and 6 employees
make an average salary of $150,000/yr....

Otherwise, if 10 employees make $10,000 in a year, that suggests their total salary.

Hope my suggestion makes sense

Rich.C@EMPOWERgmat.com · Answer

HI peter456,

The GMAT tends to be a bit more specific with the way that it's writers phrase the questions that you'll face on Test Day - so this type of bias/ambiguity almost never happens on the actual Exam. This question is still a relevant example of a Weighted Average question though, so you should make sure that you're comfortable with the math/concepts involved (since you will see them on Test Day).

GMAT assassins aren't born, they're made,
Rich

Contact Rich at [email protected]

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