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Last year, a certain company began manufacturing product X a [#permalink]
14 Dec 2012, 07:13

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B

C

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95% (hard)

Question Stats:

44% (03:42) correct
56% (02:22) wrong based on 803 sessions

Last year, a certain company began manufacturing product X and sold every unit of product X that it produced. Last year the company's total expenses for manufacturing product X were equal to $100,000 plus 5 percent of the company's total revenue from all units of product X sold. If the company made a profit on product X last year, did the company sell more than 21,000 units of product X last year?

(1) The company's total revenue from the sale of product X last year was greater than $110,000. (2) For each unit of product X sold last year, the company's revenue was $5.

Re: Last year, a certain company began manufacturing product X a [#permalink]
14 Dec 2012, 07:20

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Last year, a certain company began manufacturing product X and sold every unit of product X that it produced. Last year the company's total expenses for manufacturing product X were equal to $100,000 plus 5 percent of the company's total revenue from all units of product X sold. If the company made a profit on product X last year, did the company sell more than 21,000 units of product X last year?

Since the company made a profit, then R-(100,000+0.05R)>0 --> R>2,000,000/19=~105,000.

(1) The company's total revenue from the sale of product X last year was greater than $110,000 --> R>110,000. Its possible that company sold just one unit for say $120,000 or 120,000 units for $1. Not sufficient.

(2) For each unit of product X sold last year, the company's revenue was $5. If total of n units were sold, then the total revenue would be $5n, so R=5n --> 5n>2,000,000/19 --> n>400,00/19>21,000. Sufficient.

Re: Last year, a certain company began manufacturing product X a [#permalink]
16 Jul 2013, 18:35

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Bunuel wrote:

Last year, a certain company began manufacturing product X and sold every unit of product X that it produced. Last year the company's total expenses for manufacturing product X were equal to $100,000 plus 5 percent of the company's total revenue from all units of product X sold. If the company made a profit on product X last year, did the company sell more than 21,000 units of product X last year?

Since the company made a profit, then R-(100,000+0.05R)>0 --> R>2,000,000/19=~105,000.

(1) The company's total revenue from the sale of product X last year was greater than $110,000 --> R>110,000. Its possible that company sold just one unit for say $120,000 or 120,000 units for $1. Not sufficient.

(2) For each unit of product X sold last year, the company's revenue was $5. If total of n units were sold, then the total revenue would be $5n, so R=5n --> 5n>2,000,000/19 --> n>400,00/19>21,000. Sufficient.

Answer: B.

I understand how you came up with R-(100,000+0.05R)>0 but how did you go about creating the equation R>2,000,000/19=~105,000.

Re: Last year, a certain company began manufacturing product X a [#permalink]
16 Jul 2013, 22:04

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Expert's post

hfbamafan wrote:

Bunuel wrote:

Last year, a certain company began manufacturing product X and sold every unit of product X that it produced. Last year the company's total expenses for manufacturing product X were equal to $100,000 plus 5 percent of the company's total revenue from all units of product X sold. If the company made a profit on product X last year, did the company sell more than 21,000 units of product X last year?

Since the company made a profit, then R-(100,000+0.05R)>0 --> R>2,000,000/19=~105,000.

(1) The company's total revenue from the sale of product X last year was greater than $110,000 --> R>110,000. Its possible that company sold just one unit for say $120,000 or 120,000 units for $1. Not sufficient.

(2) For each unit of product X sold last year, the company's revenue was $5. If total of n units were sold, then the total revenue would be $5n, so R=5n --> 5n>2,000,000/19 --> n>400,00/19>21,000. Sufficient.

Answer: B.

I understand how you came up with R-(100,000+0.05R)>0 but how did you go about creating the equation R>2,000,000/19=~105,000.

Re: Last year, a certain company began manufacturing product X a [#permalink]
17 Jul 2013, 12:39

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Statement 1: Top line revenue numbers only. Doesn't tell us anything about unit costs or information helping us to figure out how many units need to be sold. Not sufficient.

Statement 2: Assume that they sold 21000 units with $5 revenue per unit. This leaves us with $105 000 total revenue. The expenses would then be $100 000 + 5% of $105 000 = $105 250. This would lead to a loss not a profit so the company MUST have sold more than 21000 units to be profitable.

Re: Last year, a certain company began manufacturing product X a [#permalink]
18 May 2014, 09:47

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Statement 1: The company's total revenue from the sale of product X last year was greater than $110,000. No way to determine the number of units sold. INSUFFICIENT.

Statement 2: For each unit of product X sold last year, the company's revenue was $5. Plug in the THRESHOLD of 21,000 units: Total revenue = 5(21,000) = 105,000. Total expenses = 100,000 + .05(105,000) = 105,250. Not possible, since the company must make a profit. Test a GREATER number of units: 100,000. Total revenue = 5(100,000) = 500,000. Total expenses = 100,000 + .05(500,000) = 125,000. Here, the company makes a profit. Thus, to make a profit, the company must sell MORE than 21,000 units. SUFFICIENT.

Re: Last year, a certain company began manufacturing product X a [#permalink]
18 Jan 2015, 04:03

RustyR wrote:

Bunuel wrote:

[b] n>400,00/19>21,000. Sufficient.

Answer: B.

How should we go about solving 400,00/19 in timed conditions?

No need to solve it, since you know that there is a profit and you know the average revenue you can figure out minimum number of units sold to make that profit. its a DS question so no need to solve

Re: Last year, a certain company began manufacturing product X a [#permalink]
21 May 2015, 06:32

Last year, a certain company began manufacturing product X and sold every unit of product X that it produced. Last year the company's total expenses for manufacturing product X were equal to $100,000 plus 5 percent of the company's total revenue from all units of product X sold. If the company made a profit on product X last year, did the company sell more than 21,000 units of product X last year?

My Approach:

Let price of each product be P$ and N be the number of units sold by the company last year.

What is provided to us:: (N*P) - (100,000 + (.05)N*P) > 0 --- [company made a profit on product X last year]

=> (.95)N*P - 100,000 > 0.

=> N*P > 100,000/.95

Now, We need to find whether N > 21,000 or Not! So we have to look for a condition which would either straight away give us value of N or value of P so that we can determine the value of N.

(1)- The company's total revenue from the sale of product X last year was greater than $110,000.

==> N*P > 110,000 -- Already we have one such inequality. This does not help, neither we get to know the value of N nor the value of P.

Hence, Insufficient.

(2)- For each unit of product X sold last year, the company's revenue was $5.

==>So, P = 5; We can Clearly find the value of N now.

==> N*5 > 100,000/(.95) => N > 1,00,00,000/(95*5) => N > 400,000/19 => N > 21,000

Re: Last year, a certain company began manufacturing product X a [#permalink]
21 May 2015, 10:37

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Expert's post

Hi All,

GMAT questions are always carefully worded - the numbers involved are NEVER random and the questions asked are specifically-worded for a reason. As such, you can take advantage of those patterns when working through Quant questions.

Here, we're told a number of facts about a company: 1) It sold EVERY unit of product X that it produced. 2) Total expenses were $100,000 + 5% of revenue from those sales. 3) The company made a PROFIT on these sales.

The question asks if the company sold MORE than 21,000 units of product X. This is a YES/NO question.

Before dealing with the two Facts, notice that the expenses were MORE than $100,000 (since the revenue factors in to that calculation), but we know that the company made a PROFIT. That combination of facts will come in handy in just a moment....

Fact 1: Total revenue from product X was GREATER than $110,000

This confirms something that we already knew (the company made a profit), but we don't know how many units were sold to earn that revenue. Fact 1 is INSUFFICIENT

Fact 2: Each unit of Product X sold brought in $5 of revenue.

Since the question asks specifically if MORE than 21,000 units were sold, we can use this number as a 'gauge'....

IF.... 21,000 units were sold at $5 per unit, we'd have 21,000(5) = $105,000 of revenue

We were told that the EXPENSES = $100,000 + 5% of revenue.....

5% of $105,000 = $5,250 $100,000 + $5,250 = $105,250 In this scenario, the expenses are GREATER than the revenue.... BUT we were told that the company made a PROFIT, so this CANNOT be what happened. If only 21,000 units were sold at this price, then the company would NOT have been profitable. Thus, MORE than 21,000 units would have to have been sold. Fact 2 is SUFFICIENT

Last year, a certain company began manufacturing product X a [#permalink]
11 Nov 2015, 04:26

sambam wrote:

Statement 1: Top line revenue numbers only. Doesn't tell us anything about unit costs or information helping us to figure out how many units need to be sold. Not sufficient.

Statement 2: Assume that they sold 21000 units with $5 revenue per unit. This leaves us with $105 000 total revenue. The expenses would then be $100 000 + 5% of $105 000 = $105 250. This would lead to a loss not a profit so the company MUST have sold more than 21000 units to be profitable.

Answer B.

Great solution +1. I would add, that we already know from the text that the Revenue > ~105000 (20/19*100000 ~ 105263), hence if we use the min value of 21000*5=105000, there must be > 21000 units. _________________

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Last year, a certain company began manufacturing product X a [#permalink]
25 Nov 2015, 07:05

Here is almost no calculation approach:

St1: clearly insufficient it could be just 1 heavy m/c or 110,000 widgets sold. St2: The stimulus says the company made profit i.e. broke even. Thus it should produce at least 100000/0.95P units. (P=5=selling price of X) If we know that 100,000/.95P>21000 SUFF and if 100,000/.95P<21000 INSUFF

100,000/.95*5>21,000? 400/19>21? 400>21*19? We know this is true as 21*19 will always be less than 20*20=400( PS: 9*11<10*10, 4*6<5*5 etc I think you get the idea)

Special Note: For problems related to break even analysis one of the most important formula to remember is: No of Units= Total Fixed Cost/Per Unit Profit. Most of the GMAT problem on this topic will play around this formula. For break even analysis pls check - https://en.wikipedia.org/wiki/Break-even_(economics) _________________

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Re: Last year, a certain company began manufacturing product X a [#permalink]
26 Nov 2015, 07:15

Expert's post

Forget conventional ways of solving math questions. In DS, Variable approach is the easiest and quickest way to find the answer without actually solving the problem. Remember equal number of variables and independent equations ensures a solution.

Last year, a certain company began manufacturing product X and sold every unit of product X that it produced. Last year the company's total expenses for manufacturing product X were equal to $100,000 plus 5 percent of the company's total revenue from all units of product X sold. If the company made a profit on product X last year, did the company sell more than 21,000 units of product X last year?

(1) The company's total revenue from the sale of product X last year was greater than $110,000. (2) For each unit of product X sold last year, the company's revenue was $5.

There are 2 variables (p: selling unit price, n; selling products' number) and 2 equations are given by the 2 conditions Looking at the conditions together, 110,000/5=22,000>21,000, so this answers the question 'yes' and (C) seems like the answer. However, the number of the product is a hidden integer, so if we apply commonly made mistakes type 4(A), For condition 1, even if the total sales is $110,000, we cannot know the number of cars, as if the price of one car is $110,000, it is 'no' but 'yes' when the price of a bolt is $1. For condition 2, 100,000+5n(0.05)<5n --> 100,000<4.75n, 100,000/4.75<n, 21,052<n. This is sufficient and the answer becomes (B).

For cases where we need 2 more equations, such as original conditions with “2 variables”, or “3 variables and 1 equation”, or “4 variables and 2 equations”, we have 1 equation each in both 1) and 2). Therefore, there is 70% chance that C is the answer, while E has 25% chance. These two are the majority. In case of common mistake type 3,4, the answer may be from A, B or D but there is only 5% chance. Since C is most likely to be the answer using 1) and 2) separately according to DS definition (It saves us time). Obviously there may be cases where the answer is A, B, D or E. _________________

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