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making hits

Expert replies
by garima99 » Wed Oct 12, 2011 10:51 am
In 2003, the Making Hits Record Company spent 40% of its total budget on the production of ten albums, 30% of its budget on the marketing of these albums, and the remainder of its budget on overhead costs. In the same year, the Song Factory Record Company spent 20% of its total budget on the production of 10 albums and 60% of its budget on the marketing of these albums. Making Hits sold a total of 800,000 copies of the ten records it produced in 2003, while the Song Factory sold a total of 1,600,000 copies of the ten records it produced in 2003.

Assuming each company met its budget, which of the following conclusions is best supported by the information given above?
The amount of money spent on marketing is directly related to the number of copies sold.
Making Hits spent more money on the production of its albums in 2003 than did the Song Factory.
Song Factory's total revenue from the sale of albums produced in 2003 was higher than that of Making Hits.
In 2003, Making Hits spent a larger percentage of its budget on overhead costs than did the Song Factory.
The Song Factory sold more copies of its 2003 albums than Making Hits did because the Song Factory spent a higher percentage of its budget on the marketing of its albums.
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Source: — Critical Reasoning |

by CappyAA » Wed Oct 12, 2011 11:05 am
A lot of times, these questions with numbers will try to confuse you by switching from percentages to values. This argument has premises that tell us the percentages of MH and SF's budgets and how they are allocated. They also tell us how many copies each of the company's 10 records sold.

A - We know nothing about the total amount of money spent on marketing, only the percentage of the total budget spent.
B - Again, we know nothing about how much money MH or SF spent, only percentages of budgets.
C - We know nothing about how much revenue MH or SF had, only numbers of copies.
D - This is true. We know that MH spent 30% (100% - 40% - 30%) of its budget on overhead costs. We also know that SF spent 20% (100% - 20% - 60%) of its budget on overhead costs. Saying that MH spent a larger percentage of its budget on overhead costs than SF did is a valid conclusion.
E - We don't know the reasons why SF sold more copies. We only know that it did sell more copies.

The answer is D
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by garima99 » Wed Oct 12, 2011 11:18 am
OA is D

Thnx
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by bubbliiiiiiii » Thu Oct 13, 2011 12:50 am
I agree with CappyAA said if we are OK to assume that the left over percentage of amount spent by SF is for overhead costs only! I mean, since its not given, aren't we having an assumption to reach the conclusion?
Regards,

Pranay
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