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Total Cost.MGMAT Ques

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Total Cost.MGMAT Ques

by rb90 » Fri Sep 10, 2010 9:43 pm
The total cost of producing item X is equal to the sum of item X's fixed cost and variable cost. If the variable cost of producing X decreased by 5% in January, by what percent did the total cost of producing item X change in January?

(1) The fixed cost of producing item X increased by 13% in January.

(2) Before the changes in January, the fixed cost of producing item X was 5 times the variable cost of producing item X.

THE ACTUAL ANSWER IS "C".


( I cant understand why B cant be the answer.Since we know the proportion between the FC and the VC, cant we add them up like : TC= 5x + .95x ; an then find out the percentage difference in the TC? )

PLEASE HELP.
Thank You.
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by pradeepkaushal9518 » Sat Sep 11, 2010 1:55 am
cop of X= fixed cost+vari cost

x=fc+vc
vc decersed by 5 % in jan what % change in total cost of X in jan ?

1.fixed cost increased by 13 % in jan

suppose x= 100 +100 in jan vc 5 % decrese and fc incresed by 13 %

x= 113+95=208 so % change is 208-200/200=8*100/200= 4 %

so 1 is suff

2. before change in jan fc=5.vc

suppose x= 120 befeore jan so x= 100+20

in jan vc decersed by 5 % s0 x=100+19=119 so we can calculate the % change so suff

i think answer is D not C
A SMALL TOWN GUY
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by harupit200281 » Sat Sep 11, 2010 10:49 pm
What if the fixed and variable prices are distributed as follows?

100 and 1
1 and 1000

??????
Answer is indeed C
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by gmatmachoman » Sat Sep 11, 2010 11:07 pm
TC = FC +VC
= X+Y

Percent change : 100 * [{X1 +Y1 - (X+Y)}/ (X+Y)]

St1 : {1.13X +0.95 Y - (X+Y)}/(X+Y)

= (0.13X-0.05Y) /(X+Y)

st 2 : X= 5Y

use st1 & st 2

Percent change = 10.75%

Pick C
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by rb90 » Mon Sep 20, 2010 10:36 pm
Dear gmatmachoman
You didnt elaborate on statement 2.If x=5y then,
TC= 5Y+Y=6Y

NEW TC= 5Y + 0.95Y
= 5.95Y

SO % CHANGE = (6Y - 5.95Y)/6Y*100
= 5/6 %

IS THIS CORRECT?
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