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# A construction company was paid a total of $500,000 for a  Question banks Downloads My Bookmarks Reviews Important topics Author Message TAGS: Intern Joined: 03 Jun 2010 Posts: 16 Followers: 0 Kudos [?]: 5 [2] , given: 0 A construction company was paid a total of$500,000 for a [#permalink]  22 Jul 2010, 10:55
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A construction company was paid a total of $500,000 for a construction project. The company's only costs for the project were for labor and materials. Was the company's profit greater than$150,000?

(1) The company's total cost was three times its cost for materials.

(2) The company's profit was greater than its cost for labor
[Reveal] Spoiler: OA
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Re: Cost/Profit Problem - is my explanation correct? [#permalink]  22 Jul 2010, 11:04
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asch13 wrote:
A construction company was paid a total of $500,000 for a construction project. The company's only costs for the project were for labor and materials. Was the company's profit greater than$150,000?

(1) The company's total cost was three times its cost for materials.

(2) The company's profit was greater than its cost for labor

Given: $$c=l+m$$
Question is $$p=500-c>150$$ true?

(1) $$c=3m$$ --> is $$500-3m>150$$ true? --> is $$m<\frac{350}{3}\approx{117}$$ true? Not sufficient.

(2) $$500-(l+m)>l$$ --> $$500>2l+m$$. Not sufficient.

(1)+(2) Question became is $$m<\frac{350}{3}\approx{117}$$ true? From (1) $$c=l+m=3m$$ --> $$l=2m$$. From (2) $$500>2l+m=4m+m=5m$$ --> $$m<100$$. Sufficient.

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Re: Cost/Profit Problem - is my explanation correct? [#permalink]  22 Jul 2010, 11:05
Cost(C) = Labor(L) + Materials(M)
Profit(P) = 500,000-C
is 500,000 - C > 150,000?
is C < 350,000

(1) C = 3M
C = 3M = L + M, L = 2M

(2) P > L
Substitute 2M for L
P > 2M
multiply both sides by 3/2
(3/2)P > 3M
Substitute C for 3M
(3/2)P > C
plug 150,000 in for P
(3/2)(150,000) > C
225,000 > C

So, C < 350,000 and the answer is yes, so then (1) and (2) together are sufficient
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Re: Cost/Profit Problem - is my explanation correct? [#permalink]  22 Jul 2010, 11:05
Bunuel wrote:
asch13 wrote:
A construction company was paid a total of $500,000 for a construction project. The company's only costs for the project were for labor and materials. Was the company's profit greater than$150,000?

(1) The company's total cost was three times its cost for materials.

(2) The company's profit was greater than its cost for labor

Given: $$c=l+m$$
Question is $$p=500-c>150$$ true?

(1) $$c=3m$$ --> is $$500-3m>150$$ true? --> is $$m<\frac{350}{3}\approx{117}$$ true? Not sufficient.

(2) $$500-(l+m)>l$$ --> $$500>2l+m$$. Not sufficient.

(1)+(2) Question became is $$m<\frac{350}{3}\approx{117}$$ true? From (1) $$c=l+m=3m$$ --> $$l=2m$$. From (2) $$500>2l+m=4m+m=5m$$ --> $$m<100$$. Sufficient.

wow, that was fast, I was just typing my explanation, but yours looks much simpler. thanks
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Re: Cost/Profit Problem - is my explanation correct? [#permalink]  22 Jul 2010, 11:53
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My solution:

1) Total cost = 3M, Labor = 2M, NS

2) Profit >= Labor, NS

1) and 2) Profit >= 2M, therefore profit must be at least 2M/(2M+M+2M)*$500,000 = 2/5*$500,000, therefore profit >= $200,000. Sufficient. _________________ If you find my posts useful, please award me some Kudos! Intern Joined: 03 Jun 2010 Posts: 16 Followers: 0 Kudos [?]: 5 [0], given: 0 Re: Cost/Profit Problem - is my explanation correct? [#permalink] 23 Jul 2010, 05:28 dauntingmcgee wrote: My solution: 1) Total cost = 3M, Labor = 2M, NS 2) Profit >= Labor, NS 1) and 2) Profit >= 2M, therefore profit must be at least 2M/(2M+M+2M)*$500,000 = 2/5*$500,000, therefore profit >=$200,000. Sufficient.

Could you please explain why profit must be at least 2M/(2M+M+2M)*500,000?
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Re: Cost/Profit Problem - is my explanation correct? [#permalink]  23 Jul 2010, 05:57

Since from:

1) we know that Labor (L) = 2 * Materials (M), and
2) we know that Profit (P) >= L
1) and 2) combined show that P >= 2M

There are only three components of the $500,000: P, L and M, so P+L+M =$500,000. The minimum amount of P is the case that P = L = 2M. In order to find what fraction P is of P+L+M we simply take $$P/(P+M+L) = 2M/(2M+M+2M) = 2M/5M = 2/5$$. Now that we know what fraction of the $500,000 is P, we simply multiply 2/5 *$500,000 to get $200,000. Sufficient. _________________ If you find my posts useful, please award me some Kudos! Math Forum Moderator Joined: 20 Dec 2010 Posts: 2035 Followers: 135 Kudos [?]: 1107 [0], given: 376 Re: Cost/Profit Problem - is my explanation correct? [#permalink] 19 Feb 2011, 13:59 Total budget = 500 Is profit > 150 Or is expenditure < 350 1) Total cost = Material+Labor T = M+L T = 3M 3M = M+L 2M = L Labor cost is twice that of material. If M=1, L=2; T=3. Expenditure < 350. Yes M=150; L=300; T=450; Expenditure > 350. No. Not sufficient. 2) Company's Profit P>L M=0; L=249; P=251. Expenditure <350. Yes M=399; L=1; P=100. Expenditure <350. No. Not sufficient. Combining 1 and 2; T=M+L=L/2+L T=(3/2)L P=500-T=500-(3/2)L P=500-(3/2)L P>L 500-(3/2)L>L 500>(5/2)L (5/2)L<500 L<200 Since M is half L. M should be <100 Even if we consider maximum of these; Total maximum expenditure = 200+100=300<350. Thus profit will always be >150. Ans: "C" _________________ Veritas Prep GMAT Instructor Joined: 16 Oct 2010 Posts: 5453 Location: Pune, India Followers: 1332 Kudos [?]: 6777 [1] , given: 177 Re: Cost/Profit Problem - is my explanation correct? [#permalink] 19 Feb 2011, 19:27 1 This post received KUDOS Expert's post fluke wrote: Total budget = 500 Is profit > 150 Or is expenditure < 350 1) Total cost = Material+Labor T = M+L T = 3M 3M = M+L 2M = L Labor cost is twice that of material. If M=1, L=2; T=3. Expenditure < 350. Yes M=150; L=300; T=450; Actually, you may not want to use so many variables and then plug values. Chances of error are very high in this case. Preferably, stick to algebra or reason it out as follows: >>> A construction company was paid a total of$500,000 for a construction project. The company's only costs for the project were for labor and materials.

500,000 is divided into 3 parts - Labor costs, material costs and profit.

>>> Was the company's profit greater than $150,000? Was profit > 150,000? >>> (1) The company's total cost was three times its cost for materials. labor cost + material cost = 3 * material cost labor cost = 2* material cost So now we know that 500,000 is divided into 3 parts - 2*material costs (labor), material costs and profit. But no idea what these costs and profit are. Not sufficient. >>> (2) The company's profit was greater than its cost for labor Profit > labor cost but no idea how much labor cost or material cost was. Not sufficient. Together, Profit > 2 material cost so even if it was greater than 2*material cost by a very very small amount, 500,000 would have been split into 3 parts: 2*material cost (labor), material cost and 2*material cost (profit) So 2*material cost would be at least 200,000. Hence profit is at least 200,000. Sufficient. Answer (C). _________________ Karishma Veritas Prep | GMAT Instructor My Blog Veritas Prep GMAT course is coming to India. Enroll in our weeklong Immersion Course that starts March 29! Veritas Prep Reviews Intern Joined: 22 Nov 2011 Posts: 8 Location: United States Schools: Carroll '15 GMAT Date: 01-12-2012 GPA: 3.17 WE: Sales (Investment Banking) Followers: 0 Kudos [?]: 6 [1] , given: 1 Re: GMATprep DS1 [#permalink] 27 Dec 2011, 13:07 1 This post received KUDOS when you combine TC (total cost)= 3m (material) TC= L (labor) + m = 3m so L=2M 500-TC>2m (aka L) 500>5m m<100 500 - less then 300= greater then 200k C Manager Joined: 29 Jul 2011 Posts: 111 Location: United States Followers: 3 Kudos [?]: 41 [1] , given: 6 Re: GMATprep DS1 [#permalink] 10 Jan 2012, 14:01 1 This post received KUDOS Rephrase: 500K - [L+M] >= 150K L+M <= 350K? 1. L+M = 3M => L = 2M. No info on M or L values, insuff. 2. L < 150K. M=? insuff Together, L<150K, which means M<75K, which implies that the labor cost is 3M<3x75K=225K. Obviously, this means that profit > 150K. Suff. _________________ I am the master of my fate. I am the captain of my soul. Please consider giving +1 Kudos if deserved! DS - If negative answer only, still sufficient. No need to find exact solution. PS - Always look at the answers first CR - Read the question stem first, hunt for conclusion SC - Meaning first, Grammar second RC - Mentally connect paragraphs as you proceed. Short = 2min, Long = 3-4 min GMAT Club Legend Joined: 09 Sep 2013 Posts: 4767 Followers: 295 Kudos [?]: 52 [0], given: 0 Re: A construction company was paid a total of$500,000 for a [#permalink]  13 Oct 2013, 01:45
Hello from the GMAT Club BumpBot!

Thanks to another GMAT Club member, I have just discovered this valuable topic, yet it had no discussion for over a year. I am now bumping it up - doing my job. I think you may find it valuable (esp those replies with Kudos).

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Re: A construction company was paid a total of $500,000 for a [#permalink] 23 Feb 2014, 22:50 Hi all. Bumping this topic because I didn't find an adequate answer explanation. Here's mine: Given : Profit = 500,000 - TC TC = L + M St. 1: (N.S.) TC = 3M 3M = L + M 2M = L St. 2: (N.S.) P > L , since L = 2M , Profit > 2M Both Statements: P = 500,000 - 3M [TC = 3M from st. 1] 2M = 500,000 - 3M [P > L , P > 2M ] . Substitute 2M into the profit formula, knowing that the Profit number must be greater than 2M. solve for M: ... M =$100,000. Plug into profit formula :

2($100,000) =$500,000 - 3($100,000) Profit >$200,000

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Re: A construction company was paid a total of $500,000 for a [#permalink] 08 Mar 2015, 12:46 Hello from the GMAT Club BumpBot! Thanks to another GMAT Club member, I have just discovered this valuable topic, yet it had no discussion for over a year. I am now bumping it up - doing my job. I think you may find it valuable (esp those replies with Kudos). Want to see all other topics I dig out? Follow me (click follow button on profile). You will receive a summary of all topics I bump in your profile area as well as via email. _________________ Re: A construction company was paid a total of$500,000 for a   [#permalink] 08 Mar 2015, 12:46
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