MGMAT FDP Prac Exam Q

[fangtray]

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.


OA is C

[Bill@VeritasPrep]

Stem: TC = OC + PC; PC decreased by 5%

1) OC increased by 13%

Initially this might look sufficient, but we have to know how OC and PC relate. A couple of examples:

OC=PC=100. TC=200. PC decreased by 5% =95, OC increased by 13% = 113. TC=95+113=208. Percent change = 8/200 = 4%

OC=200, PC=100. TC=300. PC decreased by 5% = 95, OC increased by 13% = 226. TC=226+95 = 321. Percent change = 21/300 = 7%

Insufficient

2) OC = 5*PC

Without knowing if OC changed in January, we can't figure out a percent change. Insufficient.

When combined, we can pick values for OC and PC and calculate the percent change. Sufficient.

[fangtray]

Stem: TC = OC + PC; PC decreased by 5%

1) OC increased by 13%

Initially this might look sufficient, but we have to know how OC and PC relate. A couple of examples:

OC=PC=100. TC=200. PC decreased by 5% =95, OC increased by 13% = 113. TC=95+113=208. Percent change = 8/200 = 4%

OC=200, PC=100. TC=300. PC decreased by 5% = 95, OC increased by 13% = 226. TC=226+95 = 321. Percent change = 21/300 = 7%

Insufficient

2) OC = 5*PC

Without knowing if OC changed in January, we can't figure out a percent change. Insufficient.

When combined, we can pick values for OC and PC and calculate the percent change. Sufficient.

And why does OC need to change at all? if it doesn't state that it changes, are we not to assume that it just didn't change?