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Telephone Company X's monthly charge for long-distance telep

This topic has 4 expert replies and 1 member reply

Telephone Company X's monthly charge for long-distance telep

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Telephone Company X's monthly charge for long-distance telephone calls is $1.95 plus $0.10 per minute, whereas Telephone Company Y's monthly charge is $5.95 plus $0.08 per minute. For what total number of minutes of long-distance calls per month would the monthly charge for the two companies be the same?

A. 100
B. 120
C. 150
D. 180
E. 200

I'm confused how to set up the formulas here. Can any experts help?

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Newbie | Next Rank: 10 Posts Default Avatar
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My shortcut would be:

Breakeven questions are always the same: you have company X and company Y

X has higher fixed costs and lower variable costs
Y has lower fixed costs and higher variabel costs

You just have to calculate when the difference in fixed costs is gone, the difference is 5.95 - 1.95 = 4
You have to earn those 4 dollar by looking at the difference is variable costs, the difference is 0.10 - 0.08 = 0.02

So you have to earn the 4 dollars/euro's/whatever back by using the variable costs, this ends up being simple by calculating 4 / 0.02 = 200

Long story short, breakeven is always:

5.95 - 1.95 = 4
0.10 - 0.08 = 0.02

4 / 0.02 = 200

The other methods used are the same, i just think this is the simplest to understand Smile

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GMAT/MBA Expert

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ardz24 wrote:
Telephone Company X's monthly charge for long-distance telephone calls is $1.95 plus $0.10 per minute, whereas Telephone Company Y's monthly charge is $5.95 plus $0.08 per minute. For what total number of minutes of long-distance calls per month would the monthly charge for the two companies be the same?

A. 100
B. 120
C. 150
D. 180
E. 200
Let x = the total number of minutes of long-distance calls

Telephone Company X's monthly charge for long-distance telephone calls is $1.95 plus $0.10 per minute
So, TOTAL charge = $1.95 + $0.10(x)

Telephone Company Y's monthly charge is $5.95 plus $0.08 per minute
TOTAL charge = $5.95 + $0.08(x)

For what total number of minutes of long-distance calls per month would the monthly charge for the two companies be the same?
We want to satisfy the equation $1.95 + $0.10(x) = $5.95 + $0.08(x)
Subtract 1.95 from both sides to get: 0.1x = 4 + 0.08x
Subtract 0.08x from both sides to get: 0.02x = 4
So, x = 4/0.02
= 400/2
= 200

Answer: E

Cheers,
Brent

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ardz24 wrote:
Telephone Company X's monthly charge for long-distance telephone calls is $1.95 plus $0.10 per minute, whereas Telephone Company Y's monthly charge is $5.95 plus $0.08 per minute. For what total number of minutes of long-distance calls per month would the monthly charge for the two companies be the same?

A. 100
B. 120
C. 150
D. 180
E. 200

I'm confused how to set up the formulas here. Can any experts help?
Let x = the number of minutes

1.95 + 0.10x = 5.95 + 0.08x
0.02x = 4.00
x = 200

Answer is E.

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Hi ardz24,

We're told that Telephone Company X's monthly charge for long-distance telephone calls is $1.95 plus $0.10 per minute and Telephone Company Y's monthly charge is $5.95 plus $0.08 per minute. We're asked for the total number of minutes of long-distance calls per month that would lead to the monthly charges for the two companies to be the SAME. This question can be solved by TESTing THE ANSWERS.

To start, it's worth noting that the difference in per-minute charges from the 2 companies is small (just $0.02 per minute), so we will clearly need a large number of minutes to make up for difference in the 'fixed' costs ($1.95 vs. 5.95). Two of the answers are relatively easy to 'manipulate' (Answers A and E) - so since we're looking for a large number of minutes, I'll start by TESTing Answer E first.

Answer E: 200 minutes
200 minutes on Company X's plan = $1.95 + (200)($0.10) = $1.95 + $20 = $21.95
200 minutes on Company Y's plan = $5.95 + (200)($0.08) = $5.95 + $16 = $21.95
These two totals match, so this must be the answer.

Final Answer: E

GMAT assassins aren't born, they're made,
Rich

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Contact Rich at Rich.C@empowergmat.com

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ardz24 wrote:
Telephone Company X's monthly charge for long-distance telephone calls is $1.95 plus $0.10 per minute, whereas Telephone Company Y's monthly charge is $5.95 plus $0.08 per minute. For what total number of minutes of long-distance calls per month would the monthly charge for the two companies be the same?

A. 100
B. 120
C. 150
D. 180
E. 200
We can let m = the total number of minutes for long-distance calls for the month and create the equation:

1.95 + 0.1m = 5.95 + 0.08m

0.02m = 4

m = 200

Answer: E

_________________
Jeffrey Miller Head of GMAT Instruction

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