A certain company that sells only cars and trucks reported

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AAPL: Moderator; Posts: 2599; Joined: Sun Oct 29, 2017 2:08 pm; Followed by:2 members

A certain company that sells only cars and trucks reported

by AAPL » Mon Dec 03, 2018 5:19 am

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A certain company that sells only cars and trucks reported that revenues from car sales in 1997 were down 11 percent from 1996 and revenues from truck sales were up 7 percent from 1996. If total revenues from car sales and truck sales in 1997 were up 1 percent from 1996, what is the ratio of revenue from car sales in 1996 to revenue from truck sales in 1996?

A. 1:2
B. 4:5
C. 1:1
D. 3:2
E. 5:3

OA A

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Source: Beat The GMAT — Problem Solving | Mon Dec 03, 2018 5:19 am

GMAT/MBA Expert

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by [email protected] » Mon Dec 03, 2018 11:29 am

Hi All,

We're told that a certain company that sells only cars and trucks reported that revenues from car sales in 1997 were down 11 percent from 1996 and revenues from truck sales in 1997 were up 7 percent from 1996. If total revenues from car sales and trucks sales in 1997 were up 1 percent from 1996, what is the RATIO of revenue from CAR sales in 1996 to revenue from TRUCK sales in 1996?

This prompt does NOT give us any information about the actual revenues for car sales or truck sales in 1996, so we'll end up using a mix of TESTing VALUES and TESTing THE ANSWERS in a moment. Based on the information in the prompt, if those two revenue values from 1996 were EQUAL though, then we can run a quick calculation on what the results would have been in 1997.

IF in 1996....
Car revenue = $100
Truck Revenue = $100
Total Revenue = $200

then the revenue in 1997 would have been...
Car revenue = 11% drop = $89
Truck Revenue = 7% gain = $107
Total revenue = $196

This is a 2% DROP from the year before, but the prompt states that it's supposed to be a 1% GAIN. To 'offset' the 11% drop in car revenue, we clearly need there to be a LARGER amount of Truck revenue. So the ratio of car revenue to truck revenue must be SMALLER than 1:1 (e.g. 1:2, 2:3, 2:5 4:7, etc.). Thus, the correct answer is either A or B.

Let's TEST Answer A:

IF in 1996....
Car revenue = $100
Truck Revenue = $200
Total Revenue = $300

then the revenue in 1997 would have been...
Car revenue = 11% drop = $89
Truck Revenue = 7% gain = $214
Total revenue = $303

This is a 1% gain from the year before - and this matches what we were told, so this MUST be the answer.

Final Answer: A

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

Contact Rich at [email protected]

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nitesh50: Junior | Next Rank: 30 Posts; Posts: 10; Joined: Tue Dec 04, 2018 5:46 am

by nitesh50 » Tue Dec 04, 2018 7:55 pm

Let the revenue from cars in 1996 be c and revenue from trucks in 1996 be t

Total revenue in 1997 would be 0.89c+1.07t
Also as total revenue in 1997 were up 1 percent from 1996, then total revenue in 1997 would be 1.01(c+t)

Now this becomes a weighted average question.
We can solve it be allegation.

0.89 1.07
1.01
6 12

Hence the ratio then becomes 1:2
Hence the answer is 1:2.

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by Scott@TargetTestPrep » Sun Mar 24, 2019 5:10 pm

AAPL wrote:Official Guide

A certain company that sells only cars and trucks reported that revenues from car sales in 1997 were down 11 percent from 1996 and revenues from truck sales were up 7 percent from 1996. If total revenues from car sales and truck sales in 1997 were up 1 percent from 1996, what is the ratio of revenue from car sales in 1996 to revenue from truck sales in 1996?

A. 1:2
B. 4:5
C. 1:1
D. 3:2
E. 5:3

OA A

We can let c = the revenue from car sales in 1996 and t = the revenue from truck sales in 1996.

Since revenue from car sales in 1997 was down 11 percent from 1996, revenue from truck sales in 1997 was up 7 percent from 1996, and total revenue from car and trucks sales in 1997 was up 1 percent from 1996, we can create the following equation:

0.89c + 1.07t = 1.01(c + t)

89c + 107t = 101(c + t)

89c + 107t = 101c + 101t

6t = 12c

t = 2c

1/2 = c/t

Thus, the ratio of revenue of car sales to truck sales in 1996 is 1 : 2.

Answer: A

Scott Woodbury-Stewart
Founder and CEO
[email protected]