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# At the beginning of the last year, a car dealership had 150

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Manager
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At the beginning of the last year, a car dealership had 150 [#permalink]

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30 Apr 2010, 10:44
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Question Stats:

33% (00:00) correct 67% (00:33) wrong based on 9 sessions

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At the beginning of the last year, a car dealership had 150 cars in stock, which the dealership had purchased for $20,000 each. During the same year, the dealership made only one purchase of the cars. What is the total amount spent by the dealership on the cars it had in stock at the end of the last year? 1) Last year the dealership purchased 50 cars for$18,000 each
2) Last year the total revenue from the sale of the cars was $180,000 Manager Joined: 20 Feb 2009 Posts: 76 Location: chennai Followers: 3 Kudos [?]: 26 [0], given: 0 Re: Answer choices are out of scope or meaning unclear [#permalink] ### Show Tags 30 Apr 2010, 12:53 At the beginning of the last year, a car dealership had 150 cars in stock, which the dealership had purchased for$20,000 each. During the same year, the dealership made only one purchase of the cars. What is the total amount spent by the dealership on the cars it had in stock at the end of the last year?
1) Last year the dealership purchased 50 cars for $18,000 each 2) Last year the total revenue from the sale of the cars was$180,000

Requirement: Total Amount Spent on car which has at the end of the year.
It can be deduced from: Tot Cost = No of Cars at the end of the year ( Cost of Purchase ) + Cost for Stocking the no of cars.

Opt - 1) begning of year no of cars ( Cost of purchase ) + no of times purchased during the year ( Cost ).
It tells amount spend on cars. ( It holds good )

Opt -2) It tells revenue earned on cars. ( not needed ).

So : Only Option A is sufficient.
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30 Apr 2010, 14:11
I agree that the meaning is unclear, but this is how I see it.

We need:
Cost of stock at the beginning of the year
Cost of stock purchased
Cost of stock sold

From the original statement, we know how many cars they had in stock at the beginning of the year, and how much they cost. We need to know what they had left at the end of the year, and the cost of those cars. Only one purchase was made, but we don’t know how much each car cost, or, how many cars were purchased. We also don’t know how many cars they sold, and which cars they sold; the ones already in stock at the beginning of the year, or the ones purchased for an unknown amount.

Statement 1: Now we know the details of the purchase, but without knowing how many cars were sold, and which cars were sold, we cannot find out the cost of the stock at the end of the year. Insufficient.

Statement 2: This gives us the revenue of what was sold during the year. But it doesn’t tell us the cost of the cars that were sold. We need the details of the cost of the specific cars sold. Insufficient.

Together, without know the details regarding the cost of the cars bought, but we are still missing the cost of cars sold. Insufficient.

My choice is E. What’s the OA?
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30 Apr 2010, 19:54
OA is E.
The question clearly asks "What is the total amount spent by the dealership on the cars it had in stock at the end of the last year?". Hence, why do we need the cost of the cars sold?

mmphf wrote:
I agree that the meaning is unclear, but this is how I see it.

We need:
Cost of stock at the beginning of the year
Cost of stock purchased
Cost of stock sold

From the original statement, we know how many cars they had in stock at the beginning of the year, and how much they cost. We need to know what they had left at the end of the year, and the cost of those cars. Only one purchase was made, but we don’t know how much each car cost, or, how many cars were purchased. We also don’t know how many cars they sold, and which cars they sold; the ones already in stock at the beginning of the year, or the ones purchased for an unknown amount.

Statement 1: Now we know the details of the purchase, but without knowing how many cars were sold, and which cars were sold, we cannot find out the cost of the stock at the end of the year. Insufficient.

Statement 2: This gives us the revenue of what was sold during the year. But it doesn’t tell us the cost of the cars that were sold. We need the details of the cost of the specific cars sold. Insufficient.

Together, without know the details regarding the cost of the cars bought, but we are still missing the cost of cars sold. Insufficient.

My choice is E. What’s the OA?
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30 Apr 2010, 22:44
achan wrote:
OA is E.
The question clearly asks "What is the total amount spent by the dealership on the cars it had in stock at the end of the last year?". Hence, why do we need the cost of the cars sold?

Not the price that they were sold for, but the cost that the dealer paid to purchase those cars. Not sure if you are thinking that the question is asking how were costs for the entire year. They want to know the cost of the inventory still in stock at the end of the year.

The dealer's cost of the cars left at the end of the year is the cost in stock at the beginning of the year plus the cost of inventory purchase minus the cost of inventory sold. We don't know the cost of what was sold, only the price the dealer was able to sell it for.
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01 May 2010, 01:30
Just to rephrase you ..
The question asks the NET amount the dealer has from the inventory (value at the beginning of the year -value of inventory at the end of year + purchasing cost) and not the amount he spent to buy the cars.

Even if above is the case, choice (1) gives purchasing cost 50*18000 and choice (2) gives Revenue(value at the beginning of the year - value of inventory at the end of year)

I still believe this question is ambiguous in nature.

mmphf wrote:
achan wrote:
OA is E.
The question clearly asks "What is the total amount spent by the dealership on the cars it had in stock at the end of the last year?". Hence, why do we need the cost of the cars sold?

Not the price that they were sold for, but the cost that the dealer paid to purchase those cars. Not sure if you are thinking that the question is asking how were costs for the entire year. They want to know the cost of the inventory still in stock at the end of the year.

The dealer's cost of the cars left at the end of the year is the cost in stock at the beginning of the year plus the cost of inventory purchase minus the cost of inventory sold. We don't know the cost of what was sold, only the price the dealer was able to sell it for.
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01 May 2010, 10:37
achan wrote:
Just to rephrase you ..
The question asks the NET amount the dealer has from the inventory (value at the beginning of the year -value of inventory at the end of year + purchasing cost) and not the amount he spent to buy the cars.

Even if above is the case, choice (1) gives purchasing cost 50*18000 and choice (2) gives Revenue(value at the beginning of the year - value of inventory at the end of year)

I still believe this question is ambiguous in nature.

mmphf wrote:
achan wrote:
OA is E.
The question clearly asks "What is the total amount spent by the dealership on the cars it had in stock at the end of the last year?". Hence, why do we need the cost of the cars sold?

Not the price that they were sold for, but the cost that the dealer paid to purchase those cars. Not sure if you are thinking that the question is asking how were costs for the entire year. They want to know the cost of the inventory still in stock at the end of the year.

The dealer's cost of the cars left at the end of the year is the cost in stock at the beginning of the year plus the cost of inventory purchase minus the cost of inventory sold. We don't know the cost of what was sold, only the price the dealer was able to sell it for.

The question is not ambiguous in nature in my opinion. The questions asks "What is the total amount spent by the dealership on the cars it had in stock at the end of the last year?

So basically its asking how much money did the dealer spent on the number of cars which were left in the inventory.
We know he sold some cars for some money but we don't know for much each of them was sold.

So lets take the statement one by one now.

1) Last year the dealership purchased 50 cars for $18,000 each Okay, so now know how total amount of money did he spend in total for 200 cars, we don't know how many were left at the end of the year. 2) Last year the total revenue from the sale of the cars was$180,000

So now we know that he sold some but we don't know how many, so say he sold 10 cars each for 18000 then the total number of cars left were 190 on which he spent 20000*150 + 40*18000 each but now say he sold 10 cars for 20000 then the answer changes and hence both the statement together as well are insufficient.

I hope that helps ..!
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01 May 2010, 11:27
Thanks.
I get it now. The question is indeed tricky.

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01 May 2010, 15:42
Nice question and ans should be E only.

As we do know total amount they had spend on the cars till the end of the year, but we do not have the number of cars sold to know their final stock.
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Re: Answer choices are out of scope or meaning unclear   [#permalink] 01 May 2010, 15:42
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