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The profit from the sale ...

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The profit from the sale ...

by factor26 » Mon Nov 28, 2011 1:10 pm
The profit from the sale of a certain appliance increases, though not proportionally, with the number of units sold. Did the profit exceed $4 million on sales of 380,000 units ?
(1) The profit exceeded $2 million on sales of 200,000 units.
(2) The profit exceeded $5 million on sales of 350,000 units.





Answer is B ... can someone please explain how this is true?
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by CappyAA » Mon Nov 28, 2011 1:44 pm
We know the profit goes up as the number of units goes up. However, it does not go up proportionally. We want to know if the profit exceeded $4 million from sales of 380,000 units.

(1) Knowing the profit exceeded $2 million on the sales of 200,000 units tells us nothing because the profit does not increase proportionally. The next 180,000 units could have profits that exceed an additional $2 million, but they could also be associated with profits that only exceed an additional $1 million. Since we don't know how the profit goes up with each unit, we cannot answer this. INSUFFICIENT

(2) Knowing the profit exceeded $5 million on the sales of 350,000 units DOES tell us something. We have already exceeded our profit of $4 million in sales with 30,000 units to spare. We also know that the profits increase as sales increase. So even if the profits are less than $0.01 per appliance, our profits from sales of 380,000 units will be greater than $4 million. SUFFICIENT

B
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by neelgandham » Mon Nov 28, 2011 1:47 pm
The profit from the sale of a certain appliance increases, though not proportionally, with the number of units sold. Did the profit exceed $4 million on sales of 380,000 units ?
(1) The profit exceeded $2 million on sales of 200,000 units.
Profit on sales of 380,000 units is > Profit on sales of 200,000 units ($2 million). Profit on sales of 380,000 units can be $10million or $3million. Hence Insufficient!
(2) The profit exceeded $5 million on sales of 350,000 units.
Profit on sales of 380,000 units is > Profit on sales of 200,000 units($5 million).Hence Sufficient!

Option B
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by Anurag@Gurome » Mon Nov 28, 2011 9:33 pm
factor26 wrote:The profit from the sale of a certain appliance increases, though not proportionally, with the number of units sold. Did the profit exceed $4 million on sales of 380,000 units ?
(1) The profit exceeded $2 million on sales of 200,000 units.
(2) The profit exceeded $5 million on sales of 350,000 units.

Answer is B ... can someone please explain how this is true?
(1) For 200,000 units, the profit exceeded $2 million
So, for 380,000 units, the profit exceeded (380,000 * 2)/200,000 = $3.8 million, but it is not clear if the profit exceeded $4 million or not; NOT sufficient.

(2) For 350,000 units, the profit exceeded $5 million.
So, for 380,000 units, the profit exceeded (380,000 * 5)/350,000 = $5.4 million, which clearly means that the profit exceeded $4 million; SUFFICIENT.

[spoiler]The correct answer is B; statement 2 alone is sufficient.[/spoiler]
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by amit.lohchab » Tue Nov 29, 2011 7:20 am
But the question says that " though not proportionally " so we can't assume profit would be directly proportional number of units sold. However, Answer can be B, if we assume that there is no loss at all so that last (380,000 - 350,000) = 30,000 items will contribute very less profit.

Please reply if i am thinking wrong?
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by factor26 » Tue Nov 29, 2011 5:49 pm
ahhh i see now!! why do i keep making these silly mistakes!? hopefully i can get these mistakes out now so test day i'll beat the gmat!

i'm going to take a shot at responding to amit's question ... please correct me if my reasoning is flawed.

-- statement 2 states that our target profit of $4mm has already been met on sales of 350m units. i think i see what you are saying here ... "well what happens if they gave away the remaining 30m units and actually took a loss large enough on those to make us not reach our target profit of $4mm?"

well the answer to this question is in the question stem itself "the profit from the sale of a certain appliance increases, .... with the number of units sold." translation ... they didnt sell/dump the remaining 30m appliances at below cost because a profit is always made. he could sell the remaining 30m units for a profit of $.01 per unit and the statement will still yield the same answer ... thus a is the correct answer.
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