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A clothing store's revenue last May was 6

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A clothing store's revenue last May was 6

by canbtg » Sat Nov 02, 2013 6:19 am
A clothing store's revenue last May was 6 percent less than its revenue last April. The store's revenue last May was greater than its expenses last May, and the store's revenue last April was greater than its expenses last April. Was the stores gross profit last May less than its gross profit last April?

(1) The stores revenue last May was $2,400 less than its revenue last April.
(2) The stores expenses last May were 4 percent less than its expenses last April.

OA B
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Source: — Data Sufficiency |
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by Uva@90 » Sat Nov 02, 2013 7:47 am
canbtg wrote:A clothing store's revenue last May was 6 percent less than its revenue last April. The store's revenue last May was greater than its expenses last May, and the store's revenue last April was greater than its expenses last April. Was the stores gross profit last May less than its gross profit last April?

(1) The stores revenue last May was $2,400 less than its revenue last April.
(2) The stores expenses last May were 4 percent less than its expenses last April.

OA B
Hi Canbtg
Let,
Ra -> Revenue at April
Rm -> Revenue at May
Ea -> Expense at April
Em -> Expense at May

We know that PROFIT = REVENUE - EXPENSE

From Question we can deduce Rm = .94Ra
We are asked to find whether Ra-Ea > Rm-Em or not.
(We need to know Ea and Em to confirm)

Statement 1: It talk about Revenue. And nothing mentioned about Expense.
Hence Insufficient.

Statement 2:
State that Em = .96Ea
Now, Rm-Em = (.94Ra) - (.96Ea)

Hence Ra-Ea > Rm-Em
Sufficient

Answer is B

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Uva.
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by Patrick_GMATFix » Wed Nov 06, 2013 8:03 am
In DS, my approach is to try solving in the following order
1) Logical Reasoning
2) Algebra
3) Plug-In/Test Values

Here we can reason our way to the answer.
revenue last May was 6 percent less than its revenue last April
Revenue dropped 6%
revenue last May was greater than its expenses last May, and the store's revenue last April was greater than its expenses last April
Store was profitable each month.
Was the stores gross profit last May less than its gross profit last April?
Since revenue went down, we expect profit to go down unless expenses decreased even more
Rephrase: Did expenses decrease even more than revenues?

Statement 1 Tells us nothing about how expenses changed. NOT SUFFICIENT.

Statement 2 Revenue dropped 6% and now we find out that expenses dropped 4%. Did expenses decrease even more than revenues? Since April REV is greater than April EXP, the 6% drop in REV > 4% drop in EXP. REV decreased more than EXP, so we can definitively answer our rephrase with a NO. SUFFICIENT

Stop as soon as you can definitively answer your rephrase (assuming your rephrase is good). Profit must have decreased from April to May.

Answer B
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by GMATGuruNY » Wed Nov 06, 2013 8:27 am
A clothing store's revenue last May was 6 percent less than its revenue last April. The store's revenue last May was greater than its expenses last May, and the store's revenue last April was greater than its expenses last April. Was the store's gross profit last May less than its gross profit last April? [/b]

1) The store's revenue last May was 2,400$ less than its revenue last April
2) The store's expenses last May were 4 percent less than its expenses last April

Statement 1: The store's revenue last May was 2,400$ less than its revenue last April.
No information about the change in expenses from April to May.
INSUFFICIENT.

Statement 2: The store's expenses last May were 4 percent less than its expenses last April.
Let R = April's revenue and E = April's expenses.
According to the question stem, May's revenue was 6% less: .94R.
According to statement 2, May's expenses were 4% less: .96E.
Profit = revenue - expenses.
For April's profit to be LESS THAN OR EQUAL TO May's profit, the following would have to be true:
R - E ≤ .94R - .96E
.6R ≤ .4E
R ≤ (2/3)E.
Not possible: the question stem indicates that R>E.
Since it is not possible that April's profit was less than or equal to May's profit, April's profit must have been GREATER than May's profit.
SUFFICIENT.

The correct answer is B.
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