The total cost of producing item X is equal to the sum of item X's overhead cost and production cost. If the production cost of producing X decreased by 5% in January, by what percent did the total cost of producing item X change in that same month?
(1) The overhead cost of producing item X increased by 13% in January.
(2) Before the changes in January, the overhead cost of producing item X was 5 times the production cost of producing item X.
Ans c
I found it to be a little on tricky side.
Cost of producing item X :
This topic has expert replies
-
- Master | Next Rank: 500 Posts
- Posts: 271
- Joined: Tue May 22, 2012 3:22 am
- Thanked: 7 times
- Followed by:3 members
Last edited by \'manpreet singh on Thu Sep 05, 2013 9:43 pm, edited 1 time in total.
- GMATGuruNY
- GMAT Instructor
- Posts: 15539
- Joined: Tue May 25, 2010 12:04 pm
- Location: New York, NY
- Thanked: 13060 times
- Followed by:1906 members
- GMAT Score:790
To determine the percent change in the total cost, we need to know the RATIO between the new cost and the original cost.The total cost of producing item X is equal to the sum of item X's overhead cost and production cost. If the production cost of producing X decreased by 5% in January, by what percent did the total cost of producing item X change in that same month?
(1) The overhead cost of producing item X increased by 13% in January.
(2) Before the changes in January, the overhead cost of producing item X was 5 times the production cost of producing item X.
Question rephrased: What is the value of (new cost)/(original cost)?
Statement 1: The overhead cost of producing item X increased by 13% in January.
Test one case that also satisfies statement 2 and one case that DOESN'T also satisfy statement 2.
Case 1:
Original overhead cost = 100, original production cost = 20, original total cost = 100+20 = 120.
13% higher overhead cost = 113, 5% lower production cost = 19, new total cost = 113+19 = 132.
Resulting ratio:
(new cost)/(original cost) = 132/120 = 11/10.
Case 2:
Original overhead cost = 100, original production cost = 40, original total cost = 100+40 = 140.
13% higher overhead cost = 113, 5% lower production cost = 38, new total cost = 113+38 = 151.
Resulting ratio:
(new cost)/(original cost) = 151/140.
Since different ratios are possible, INSUFFICIENT.
Statement 2: Before the changes in January, the overhead cost of producing item X was 5 times the production cost of producing item X.
No information about how the overhead cost changes in January.
INSUFFICIENT.
Statements combined:
Case 1 satisfies both statements.
Test one more case that satisfies both statements.
Case 3:
Original overhead cost = 200, original production cost = 40, original total cost = 200+40 = 240.
13% higher overhead cost = 226, 5% lower production cost = 38, new total cost = 226+38 = 264.
Resulting ratio:
(new cost)/(original cost) = 264/240 = 11/10.
Since Case 1 and Case 3 yield the same ratio, the two statements combined indicate that (new cost)/(original cost) = 11/10.
SUFFICIENT.
The correct answer is C.
Last edited by GMATGuruNY on Fri Mar 04, 2016 3:50 pm, edited 1 time in total.
Private tutor exclusively for the GMAT and GRE, with over 20 years of experience.
Followed here and elsewhere by over 1900 test-takers.
I have worked with students based in the US, Australia, Taiwan, China, Tajikistan, Kuwait, Saudi Arabia -- a long list of countries.
My students have been admitted to HBS, CBS, Tuck, Yale, Stern, Fuqua -- a long list of top programs.
As a tutor, I don't simply teach you how I would approach problems.
I unlock the best way for YOU to solve problems.
For more information, please email me (Mitch Hunt) at [email protected].
Student Review #1
Student Review #2
Student Review #3
Followed here and elsewhere by over 1900 test-takers.
I have worked with students based in the US, Australia, Taiwan, China, Tajikistan, Kuwait, Saudi Arabia -- a long list of countries.
My students have been admitted to HBS, CBS, Tuck, Yale, Stern, Fuqua -- a long list of top programs.
As a tutor, I don't simply teach you how I would approach problems.
I unlock the best way for YOU to solve problems.
For more information, please email me (Mitch Hunt) at [email protected].
Student Review #1
Student Review #2
Student Review #3
- ani781
- Master | Next Rank: 500 Posts
- Posts: 141
- Joined: Fri Jun 24, 2011 4:35 am
- Location: Edison
- Thanked: 12 times
- Followed by:1 members
Hi Mitch,
What is the best way to do these questions in a very quick manner... by the way you have shown it looks so simple.... but when I approach these questions , almost invariable I dont know exactly whether to take numbers or go go algebraically.
Pls help me understand what are the situations where we should go with smart number pickin, as was done in this question.
Thanks in advance !!
What is the best way to do these questions in a very quick manner... by the way you have shown it looks so simple.... but when I approach these questions , almost invariable I dont know exactly whether to take numbers or go go algebraically.
Pls help me understand what are the situations where we should go with smart number pickin, as was done in this question.
Thanks in advance !!
- Java_85
- Master | Next Rank: 500 Posts
- Posts: 234
- Joined: Tue Jul 16, 2013 9:00 am
- Location: West Virginia
- Thanked: 9 times
I found it a little tricky too, if we were assuming that there was no change in the overhead cost in the month of January then the answer would be B , but for this case it is C.